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EXHIBIT 10
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
among
VDI MULTIMEDIA
as Borrower
THE LENDERS PARTIES HERETO,
and
UNION BANK OF CALIFORNIA, N.A.
as Agent
Dated as of September 28, 2000
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS.......................................................................................2
1.1 Defined Terms.....................................................................................2
1.2 Other Definitional Provisions....................................................................20
SECTION 2. AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT; COMMITMENT AMOUNTS..............................21
2.1 Revolving Loans and Letters of Credit; Loan Commitment Amounts...................................21
2.2 Reserved.........................................................................................23
2.3 Issuance of Letters of Credit....................................................................23
2.4 Optional Prepayments.............................................................................26
2.5 Mandatory Prepayments............................................................................27
2.6 Conversion and Continuation Options..............................................................28
2.7 Minimum Amounts of Tranches......................................................................28
2.8 Interest Rates and Payment Dates.................................................................28
2.9 Computation of Interest and Fees.................................................................29
2.10 Inability to Determine Interest Rate.............................................................29
2.11 Pro Rata Treatment and Payments..................................................................29
2.12 Illegality.......................................................................................30
2.13 Increased Costs..................................................................................30
2.14 Taxes............................................................................................31
2.15 Indemnity........................................................................................32
2.16 Mitigation of Costs..............................................................................33
2.17 Commitment Fee...................................................................................33
SECTION 3. REPRESENTATIONS AND WARRANTIES...................................................................33
3.1 Organization and Good Standing...................................................................33
3.2 Power and Authority..............................................................................33
3.3 Validity and Legal Effect........................................................................34
3.4 No Violation of Laws or Agreements...............................................................34
3.5 Title to Assets; Existing Encumbrances; Legal Names..............................................34
3.6 Capital Structure; Equity Ownership..............................................................34
3.7 Subsidiaries and Affiliates......................................................................34
3.8 Material Contracts...............................................................................34
3.9 Taxes and Assessments............................................................................35
3.10 Litigation and Legal Proceedings.................................................................35
3.11 Accuracy of Financial Information................................................................35
3.12 Accuracy of Other Information....................................................................36
3.13 Compliance with Laws Generally...................................................................36
3.14 ERISA Compliance.................................................................................36
3.15 Environmental Compliance.........................................................................37
3.16 Federal Regulations..............................................................................37
3.17 Fees and Commissions.............................................................................37
3.18 Solvency.........................................................................................38
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3.19 Investment Company Act; Public Utility Holding Company Act.......................................38
3.20 Nature of Business...............................................................................38
3.21 Use of Proceeds..................................................................................38
3.22 Event of Default.................................................................................38
3.23 Ranking of Loans.................................................................................38
3.24 Material Contracts...............................................................................38
SECTION 4. CONDITIONS PRECEDENT.............................................................................38
4.1 Conditions to Restatement Date...................................................................38
4.2 Conditions to Each Loan or Letter of Credit......................................................40
4.3 Conditions Subsequent............................................................................41
SECTION 5. AFFIRMATIVE COVENANTS............................................................................42
5.1 Financial Statements.............................................................................42
5.2 Certificates; Other Information..................................................................43
5.3 Payment of Obligations...........................................................................44
5.4 Conduct of Business and Maintenance of Existence.................................................44
5.5 Maintenance of Property..........................................................................44
5.6 Insurance........................................................................................44
5.7 Inspection of Property; Books and Records; Discussions...........................................44
5.8 Environmental Laws...............................................................................45
5.9 Use of Proceeds..................................................................................45
5.10 Compliance With Laws, Etc........................................................................46
5.11 Certain Obligations Respecting Subsidiaries; Prohibitions on Certain Agreements..................46
5.12 Year 2000........................................................................................46
5.13 Borrowing Base Certificate.......................................................................47
5.14 Interest Rate Protection.........................................................................47
5.15 Borrowing Base Review and Appraisal..............................................................47
SECTION 6. NEGATIVE COVENANTS...............................................................................47
6.1 Financial Condition Covenants....................................................................47
6.2 Limitation on Indebtedness.......................................................................48
6.3 Limitation on Liens..............................................................................49
6.4 Limitation on Fundamental Changes................................................................50
6.5 Limitation on Sale of Assets.....................................................................50
6.6 Limitation on Dividends..........................................................................50
6.7 Limitation on Investments, Loans and Advances....................................................50
6.8 Transactions with Affiliates.....................................................................51
6.9 Fiscal Year......................................................................................51
6.10 Sale-Leaseback Transactions......................................................................51
6.11 Lines of Business................................................................................51
6.12 Stock Repurchases................................................................................52
6.13 Certain Accounting Changes.......................................................................52
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SECTION 7. EVENTS OF DEFAULT................................................................................52
SECTION 8. THE AGENT........................................................................................54
8.1 Appointment......................................................................................54
8.2 Delegation of Duties.............................................................................55
8.3 Exculpatory Provisions...........................................................................55
8.4 Reliance by the Agent............................................................................55
8.5 Notice of Default................................................................................55
8.6 Non-Reliance on the Agent and Other Lenders......................................................56
8.7 Indemnification..................................................................................56
8.8 The Agent in Its Individual Capacity.............................................................57
8.9 Successor Agent..................................................................................57
8.10 Collateral Documents.............................................................................57
SECTION 9. MISCELLANEOUS....................................................................................58
9.1 Amendments and Waivers...........................................................................58
9.2 Notices..........................................................................................58
9.3 No Waiver; Cumulative Remedies...................................................................59
9.4 Survival of Representations and Warranties.......................................................59
9.5 Payment of Expenses and Taxes....................................................................59
9.6 Successors and Assigns; Participations; Purchasing Lenders.......................................60
9.7 Adjustments; Set-Off.............................................................................63
9.8 Counterparts.....................................................................................63
9.9 Severability.....................................................................................63
9.10 Integration......................................................................................64
9.11 GOVERNING LAW....................................................................................64
9.12 Acknowledgements.................................................................................64
9.13 Headings.........................................................................................64
9.14 Copies of Certificates, Etc......................................................................64
9.15 Treatment of Certain Information; Confidentiality................................................64
9.16 WAIVER OF JURY TRIAL.............................................................................65
9.17 Effect of Amendment and Restatement..............................................................66
Exhibits
A Form of Note
B Form of Assignment and Acceptance
C Form of Continuation Notice
D Form of Letter of Credit Request
E Form of Borrowing Notice
F Form of Borrowing Base Certificate
G Form of Officer's Certificate
H Form of Covenant Compliance Certificate
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Schedules
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2.1 Commitments
2.8 Applicable Margins
3.1 Business Qualification Jurisdictions
3.5 Legal and Trade Names
3.6 Capital Structure; Equity Ownership
3.7 Subsidiaries and Affiliates
3.10 Litigation
3.17 Certain Fees
4.1(e) Lien Searches
4.1(f) Repayment of Certain Indebtedness
4.1(h) Fixed Assets
4.3(a) Landlord Consents
6.2 Indebtedness
6.3 Liens
6.7 Investments
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
September 28, 2000, among (1) VDI MULTIMEDIA, a California corporation (the
"BORROWER"), (2) the several banks and other financial institutions parties to
this Agreement (the "LENDERS"), and (3) UNION BANK OF CALIFORNIA, N.A., as Agent
for the Lenders hereunder ("UBOC"; in its capacity as agent, the "AGENT").
RECITALS
A. The Borrower, the Agent, and certain banks and other financial
institutions named as Lenders therein are parties to that certain Amended and
Restated Credit Agreement dated as of November 17, 1998 (the "Restated
Agreement"), as amended by that certain First Amendment to Amended and Restated
Credit Agreement (the "First Amendment"), dated as of February 19, 1999, that
certain Second Amendment to Amended and Restated Credit Agreement (the "Second
Amendment"), dated as of October 29, 1999, that certain Third Amendment to
Amended and Restated Credit Agreement (the "Third Amendment"), dated as of
November 17, 1999, that certain Fourth Amendment to Amended and Restated Credit
Agreement (the "Fourth Amendment"), dated as of December 17, 1999, and that
certain Fifth Amendment to Amended and Restated Credit Agreement, (the "Fifth
Amendment"; together with the Restated Agreement, the First Amendment, the
Second Amendment, the Third Amendment and the Fourth Amendment the "Existing
Agreement"), dated as of June 15, 2000 pursuant to which UBOC has made available
to the Borrower revolving and term loan credit facilities, with a letter of
credit subfacility, upon the terms and conditions therein set forth.
B. The Borrower has requested that UBOC modify various terms and
conditions of the Existing Agreement to eliminate the existing term loan
facility and to make available to it a new revolving credit facility, including
a letter of credit subfacility, in an aggregate amount not exceeding
$45,000,000, for the purposes of (i) repaying all unpaid principal and interest
outstanding under the Existing Agreement, (ii) funding working capital and
capital expenditures, (iii) funding general corporate purposes, including stock
repurchases of up to a maximum of $5,000,0000, and (iv) providing additional
funds for equipment purchases and acquisitions, in each case on the terms and
conditions set forth below.
C. In order to provide for the modification of various terms and
conditions of the Existing Agreement, the parties have agreed to amend and
restate the representations, warranties, covenants, agreements and obligations
of the Borrower in this Agreement, which completely amends, restates and
replaces the Existing Agreement, all upon the terms and provisions and subject
to the conditions hereinafter set forth.
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:
"ACCOUNTANTS": PricewaterhouseCoopers or such other firm of independent
certified public accountants of recognized national standing as shall be
selected by the Borrower.
"ACCOUNTS RECEIVABLE": all of the Borrower's or any Domestic
Subsidiary's now owned or hereafter acquired (a) "accounts" (as such term is
defined in the UCC), other receivables, book debts and other forms of
obligations, whether arising out of goods sold or services rendered or from any
other transaction; (b) rights in, to and under all purchase orders or receipts
for goods or services; (c) rights to any goods represented or purported to be
represented by any of the foregoing (including unpaid sellers' rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods); (d) moneys due or to become due to
the Borrower or any Domestic Subsidiary under all purchase orders and contracts
for the sale of goods or the performance of services or both by the Borrower or
any Domestic Subsidiary (whether or not yet earned by performance on the part of
the Borrower or such Domestic Subsidiary), including the proceeds of the
foregoing; (e) any notes, drafts, letters of credit, insurance proceeds or other
instruments, documents and writings evidencing or supporting the foregoing; and
(f) all collateral security and guarantees of any kind given by any other Person
with respect to any of the foregoing.
"ACCOUNTS RECEIVABLE VALUE": at the date of determination thereof, the
aggregate face amount of Eligible Accounts Receivable less taxes, discounts,
credits, allowances and retainages.
"ACQUISITION": the acquisition by the Borrower or any Subsidiary of any
equity interest in (including any warrants, options and other rights to acquire
such interests), or any or all of the assets of, any other Person.
"ADR AGREEMENT": that certain Alternative Dispute Resolution Agreement
dated as of September 28, 2000 among the Borrower, VDIMI, Multi-Media, and UBOC,
as Agent.
"AFFILIATE": as to any Person, (a) any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or (b) any Person who is a director, officer or partner (i) of such
Person or (ii) of any Subsidiary of such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly, to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"AGENT": as defined in the preamble hereto.
"AGGREGATE AVAILABLE LOAN COMMITMENT": the sum of the Available Loan
Commitments of each Lender.
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"AGGREGATE COMMITMENT": the sum of the Loan Commitments set forth on
Schedule 2.1 hereto, as the same may be adjusted from time to time pursuant to
the provisions hereof.
"AGREEMENT": this Second Amended and Restated Credit Agreement, as
amended, waived, supplemented or otherwise modified from time to time.
"APPLICABLE BASE RATE MARGIN": with respect to each Base Rate Loan, the
margin set forth in Schedule 2.8, as determined by the Borrower's Funded Debt:
EBITDA ratio as of the date of determination thereof.
"APPLICABLE LENDING OFFICE": for any Lender, its offices for LIBOR
Loans, Base Rate Loans and participations in Letters of Credit, specified below
its signature on the signature pages hereof or in the Assignment and Acceptance
pursuant to which it became a party hereto, as the case may be, any of which
offices may, upon 10 days' prior written notice to the Agent and the Borrower,
be changed by such Lender.
"APPLICABLE LIBOR MARGIN": with respect to each LIBOR Loan, the margin
set forth in Schedule 2.8 based upon the Borrower's Funded Debt: EBITDA ratio as
of the date of determination thereof.
"APPLICABLE MARGIN": with respect to each LIBOR Loan and each Base Rate
Loan, the Applicable LIBOR Margin and the Applicable Base Rate Margin,
respectively, set forth in Schedule 2.8 as of the date of determination thereof.
"ASSET DISPOSITION": the sale, sale and leaseback, transfer,
conveyance, exchange, long-term lease accorded sales treatment under GAAP or
similar disposition (including by means of a merger, consolidation,
amalgamation, joint venture or other substantive combination) of any of the
Properties, business or assets (other than marketable securities, including
"margin stock" within the meaning of Regulation U, liquid investments and other
financial instruments but, including, without limitation, the assignment of any
lease, license or permit relating to the Properties) of the Borrower or any of
its Subsidiaries to any Person or Persons other than to the Borrower or any of
its Wholly Owned Subsidiaries; PROVIDED THAT Asset Dispositions shall not
include the sale or other disposition in the ordinary course of business and on
ordinary business terms of assets in an aggregate amount not exceeding
$1,000,000.
"ASSIGNMENT AND ACCEPTANCE": an Assignment and Acceptance substantially
in the form of Exhibit B to this Agreement.
"AVAILABLE COMMITMENT": at the time of determination thereof, the
difference between the lesser of (i) the Aggregate Commitment and (ii) the
Borrowing Base AND the aggregate principal amounts of all Loans outstanding.
"AVAILABLE LOAN COMMITMENT": with respect to each Lender having a Loan
Commitment on the date of determination thereof, the amount by which (a) the
Loan Commitment of such Lender on such date exceeds (b) the principal sum of
such Lender's (i) Revolving Loans outstanding, (ii) Loan Commitment Percentage
of the aggregate Letter of Credit Amount of all Letters of Credit outstanding
and (iii) Loan Commitment Percentage of the aggregate amount of unreimbursed
drawings under all Letters of Credit on such date.
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"BASE RATE": the rate of interest which is the higher of (i) the
Federal Funds Effective Rate plus 0.50%, or (ii) the Reference Rate.
"BASE RATE LOANS": Loans the rate of interest applicable to which is
based upon the Base Rate.
"BENEFITTED LENDER": as defined in Section 9.7.
"BORROWER": as defined in the preamble hereto.
"BORROWING BASE": for the period from the Restatement Date through
December 31, 2001, the sum of (i) 90% of the Accounts Receivable Value, (ii) 50%
of the Inventory Value, and (iii) 100% of the Operating Machinery and Equipment
Value; for the period from January 1, 2002 through December 31, 2002, the sum of
(1) 85% of the Accounts Receivable Value, (2) 50% of the Inventory Value, and
(3) 90% of the Operating Machinery and Equipment Value; and for the period from
January 1, 2003 through the Loan Commitment Expiration Date, the sum of (x) 80%
of the Accounts Receivable Value, (y) 50% of the Inventory Value, and (z) 80% of
the Operating Machinery and Equipment Value.
"BORROWING BASE REVIEW": a review, performed by the Agent or a designee
of the Agent reasonably acceptable to the Borrower, which evaluates the
Borrower's compliance with the reporting requirements under this Agreement
applicable to the Borrowing Base, including, but not limited to, an examination
of the Borrower's books and records relating to the Borrower's Accounts
Receivable Value, Inventory Value, and Operating Machinery and Equipment Value.
"BORROWING BASE CERTIFICATE": a certificate, duly executed by a
Responsible Officer, substantially in the form of Exhibit F.
"BORROWING NOTICE": a notice from the Borrower to the Agent requesting
a borrowing of Loans, substantially in the form of Exhibit E.
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on
which commercial banks in the State of California are authorized or required by
law to close and which, in the case of a LIBOR Loan, is a Eurodollar Business
Day.
"CASH DIVIDENDS": with respect to any Person, that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
or partners or authorized or made any other distribution, payment or delivery of
property (other than capital stock of such Person) or cash to its stockholders
or partners as such, or redeemed, retired, purchased or otherwise acquired,
directly or indirectly, for a consideration any shares of any class of its
capital stock or any partnership interests outstanding on or after the
Restatement Date (or any options or warrants issued by such Person with respect
to its capital stock), or set aside any funds for any of the foregoing purposes;
PROVIDED THAT such dividend is payable in cash or cash equivalents; and PROVIDED
FURTHER that a Permitted Repurchase shall not be deemed a Cash Dividend. Without
limiting the foregoing, "Cash Dividends" with respect to any Person shall also
include all payments made or required to be made by such Person with respect to
any stock appreciation rights, plans, equity incentive or achievement plans or
any similar plans or setting aside of any funds for the foregoing purposes.
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"CAPITAL EXPENDITURES": for any period, expenditures (including,
without limitation, the aggregate amount of Capitalized Lease Obligations
incurred during such period) made by the Borrower or any of its Subsidiaries to
acquire or construct fixed assets, plant and equipment (including renewals,
improvements and replacements, but excluding repairs) during such period
computed in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATIONS": obligations for the payment of rent
for any real or personal property under leases or agreements to lease that, in
accordance with GAAP, have been or should be capitalized on the books of the
lessee and, for purposes hereof, the amount of any such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation), any and
all warrants, options or rights to purchase any of the foregoing or any other
securities convertible into any of the foregoing.
"CASH COLLATERAL DEPOSIT": cash deposits made by the Borrower to the
Agent, to be held by the Agent as Collateral in the Collateral Account pursuant
to the Security Agreement, for the reimbursement of drawings under Letters of
Credit.
"CASH INCOME TAXES": cash income taxes paid by the Borrower and its
Subsidiaries during the fiscal quarter most recently ended and the immediately
preceding three fiscal quarters.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": all of the property (tangible or intangible) purported to
be subject to the lien or security interest purported to be created by any
mortgage, deed of trust, security agreement, pledge agreement, assignment or
other security document heretofore or hereafter executed by the Borrower as
security for all or part of the Obligations.
"COLLATERAL ACCOUNT": as defined in Section 4 of the Security
Agreement.
"COLLATERAL DOCUMENTS": the Security Agreement, all notices of security
interests in deposit accounts requested by the Agent pursuant to the Security
Agreement, all Form UCC-1 Financing Statements and amendments thereto and any
other document encumbering the Collateral or evidencing or perfecting a security
interest therein for the benefit of the Lenders executed by the Borrower or any
Subsidiary.
"COMMITMENT FEE AMOUNT": shall equal 0.500% PER ANNUM for any period in
which the Borrower's Funded Debt: EBITDA ratio is equal to or greater than 2.00;
shall equal 0.375% PER ANNUM for any period in which the Borrower's Funded Debt:
EBITDA ratio is equal to or exceeds 1.50 but is less than 2.00; and shall equal
0.250% PER ANNUM for any period in which the Borrower's Funded Debt: EBITDA
ratio is less than 1.50.
"COMMITMENT PERCENTAGE": as to any Lender at any time, the percentage
of the Aggregate Commitment then constituted by such Lender's Commitments.
"COMMITMENTS": as to any Lender, any Loan Commitment held by it
hereunder.
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"COMMONLY CONTROLLED ENTITY": as to any Person, an entity, whether or
not incorporated, which is under common control with such Person within the
meaning of Section 4001 of ERISA or is part of a group which includes such
Person and which is treated as a single employer under Section 414 of the Code.
"CONTINUATION NOTICE": a request for continuation or conversion of a
Loan as set forth in Section 2.6, substantially in the form of Exhibit C.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"COVENANT COMPLIANCE CERTIFICATE": a certificate of a senior financial
officer of the Borrower, in form, substantially in the form of Exhibit H hereto,
with regard to (and setting forth the calculations for) each of the covenants
set forth in this Agreement.
"DEBT SERVICE": for any period, the sum, for the Borrower and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) all regularly scheduled payments or
regularly scheduled prepayments of principal of Indebtedness (including, without
limitation, the principal component of any payments in respect of Capitalized
Lease Obligations) made during such period PLUS (b) all Interest Expense for
such period; PROVIDED THAT "Debt Service" shall not be deemed to include
principal paid by the Borrower and its Subsidiaries under the Existing
Agreement.
"DEFAULT": any of the events specified in Section 7, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"DOLLARS" and "$": dollars in lawful currency of the United States.
"DOMESTIC SUBSIDIARY": each Subsidiary organized under the laws of the
United States or any state thereof.
"DRAWING LENDER": as defined in Section 2.3(c).
"EARN-OUT PAYMENTS": cash payments required to be made by the Borrower
pursuant to earn-out provisions of any acquisition agreement entered into by the
Borrower prior to the date hereof for the purpose of acquiring a business.
"EBITDA": for any period, for the fiscal quarter most recently ended
and the immediately preceding three fiscal quarters, Net Income after
eliminating extraordinary gains and losses, PLUS (i) provisions for income
taxes, (ii) depreciation and amortization and (iii) Interest Expense.
"ELIGIBLE ACCOUNTS RECEIVABLE": an Account Receivable which is
acceptable to the Agent, but in no event shall Eligible Accounts Receivable
include any Account Receivable:
(a) that does not arise from the sale of finished goods in the ordinary
course of the Borrower's business;
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(b) that is not subject to a valid, perfected first priority Lien in
favor of the Agent;
(c) as to which any covenant, representation or warranty contained in
the Loan Documents with respect to such Account Receivable has been breached;
(d) that is not owned by the Borrower or any Domestic Subsidiary or is
subject to any right, claim or interest of another Person other than the Lien in
favor of the Agent;
(e) with respect to which an invoice has not been sent;
(f) that is due and payable from a buyer located outside of the United
States, but only to the extent that inclusion of such Accounts Receivable as an
Eligible Accounts Receivable would result in Accounts Receivables due and
payable from a buyers located outside of the United States constituting in
excess of 10% of the aggregate Eligible Accounts Receivable;
(g) that is not paid within 120 days from the date of the invoice;
(h) that arises from a sale of goods to or performance of services for
an Affiliate of the Borrower, or an employee of the Borrower or an Affiliate of
the Borrower;
(i) that the Agent, in its reasonable judgment, deems uncollectible for
any reason;
(j) that is due and payable in a currency other than Dollars;
(k) that is due and payable from a buyer who (i) applies for, suffers,
or consents to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property or calls a meeting of its creditors, (ii) admits in writing its
inability, or is generally unable, to pay its debts as they become due or ceases
operations of its present business, (iii) makes a general assignment for the
benefit of creditors, (iv) commences a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in effect), (v) is adjudicated as bankrupt
or insolvent, (vi) files a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesces to, or fails to have
dismissed, any petition which is filed against it in any involuntary case under
such bankruptcy laws, or (viii) takes any action for the purpose of effecting
any of the foregoing;
(l) that arises from a bill-and-hold, guaranteed sale, sale-and-return,
sale on approval, consignment or any other repurchase or return basis or is
evidenced by chattel paper;
(m) for which the goods giving rise to such Account Receivable have not
been shipped and delivered to and accepted by the buyer or the services giving
rise to such Account Receivable have not been performed by the Borrower or any
Domestic Subsidiary and accepted by the buyer or the Account Receivable
otherwise does not represent a final sale;
(n) that is subject to any offset, deduction, defense, dispute, or
counterclaim or the buyer is also a creditor or supplier of the Borrower or any
Domestic Subsidiary or the Account Receivable is contingent in any respect or
for any reason;
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(o) for which the Borrower or any Domestic Subsidiary has made any
agreement with the buyer for any deduction therefrom, except for (i) discounts
or allowances made in the ordinary course of business for prompt payment and
(ii) cooperative advertising discounts;
(p) for which any of the goods giving rise to such Account Receivable
have been returned, rejected or repossessed, or for which any part of the
payment due from buyer is overdue; or
(q) that arises from or out of any contract or other agreement
involving the United States of America, any agency or instrumentality of the
United States of America, or any entity entitled to full of partial immunity
under the laws applicable in any domestic or foreign jurisdiction or any entity
to which an assignment of claims is subject to consent.
"ELIGIBLE INVENTORY": Inventory wholly-owned by the Borrower, which
Inventory is acceptable to the Agent, less reserves for discontinued items but
in no event shall Eligible Inventory include any Inventory:
(a) that is not subject to a valid, perfected first priority Lien in
favor of the Agent;
(b) that is located at an address that has not been disclosed to the
Agent in writing;
(c) that is placed by the Borrower or any Subsidiary on consignment or
held by the Borrower or any Subsidiary on consignment from another Person;
(d) that is in the possession of a processor or bailee, or located on
premises leased or subleased to the Borrower, or on premises subject to a
mortgage in favor of a Person other than the Agent, unless such processor or
bailee or mortgagee or the lessor or sublessor of such premises, as the case may
be, has executed and delivered all documentation which the Agent shall require
to evidence the subordination or other limitation or extinguishment of such
Person's rights with respect to such Inventory and the Agent's right to gain
access thereto;
(e) that is produced in violation of the Fair Labor Standards Act or
subject to the "hot goods" provisions contained in 29 U.S.C. ss.215 or any
successor statute or section;
(f) as to which any covenant, representation or warranty with respect
to such Inventory contained in the Loan Documents has been breached;
(g) that is not located in the United States;
(h) that is demonstration Inventory;
(i) that consists of proprietary software (i.e. software designed
solely for the Borrower's or any Domestic Subsidiary's internal use and not
intended for resale); or
(j) that is damaged, obsolete, returned, defective, recalled or unfit
for further processing;
"ENVIRONMENTAL CONTROL STATUTES": as defined in Section 3.15.
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<PAGE>
"EPA": as defined in Section 3.15.
"EQUITY OFFERING": the sale or issuance (or reissuance) by the Borrower
or any Subsidiary of any equity interest (common stock, preferred stock,
partnership interests, member interests or otherwise) or any options, warrants,
convertible securities or other rights to purchase such beneficial or equity
interests; PROVIDED THAT all options or other rights to purchase beneficial or
equity interests in the Borrower pursuant to the 1996 Stock Incentive Plan in
effect as of the Restatement Date shall not be considered an Equity Offering for
purposes of this Agreement.
"EQUITY RIGHTS": with respect to any Person, any subscriptions,
options, warrants, commitments, preemptive rights or agreements of any kind
(including, without limitation, any stockholders' or voting trust agreements)
for the issuance, sale, registration or voting of, or securities convertible
into, any additional shares of capital stock of any class, or partnership or
other ownership interests of any type in, such Person.
"EQUITYHOLDER AGREEMENTS": each shareholder agreement, limited
liability company agreement, partnership agreement, voting agreement, buy-sell
agreement, option, warrant, put, call, or right of first refusal, and any other
agreement or instrument with conversion rights into equity of the Borrower or
any Subsidiary either (a) between the Borrower or any Subsidiary and any holder
or prospective holder of any equity interest of the Borrower or any Subsidiary
(including interests convertible into such equity) or (b) otherwise between any
two or more such holders of equity interests.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE": as to any Person, each trade or business including
such Person, whether or not incorporated, which together with such Person would
be treated as a single employer under Section 4001(a)(14) of ERISA.
"EURODOLLAR BUSINESS DAY": any day on which banks are open for dealings
in Dollar deposits in the London Interbank Market.
"EVENT OF DEFAULT": any of the events specified in Section 7, PROVIDED
THAT any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"EXCLUDED TAXES": all taxes imposed on or by reference to the net
income of the Agent or any Lender or its Applicable Lending Office by any
Governmental Authority and all franchise taxes, taxes on doing business or taxes
measured by capital or net worth imposed on the Agent or on any Lender or its
Applicable Lending Office by any Governmental Authority and any taxes imposed by
any Governmental Authority arising as a consequence of the failure of any Lender
to provide accurate documentation required to be provided by such Lender
pursuant to Section 2.14(b).
"EXISTING AGREEMENT": as defined in the Recitals hereto.
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<PAGE>
"EXISTING LOAN": the revolving loan, term loan and letter of credit
facilities made available by UBOC to the Borrower pursuant to the Existing
Agreement.
"FEDERAL FUNDS EFFECTIVE RATE": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent from three
federal funds brokers of recognized standing selected by it.
"FIXED CHARGE RATIO": as at the last day of any fiscal quarter,
determined on a consolidated basis for the Borrower and its Subsidiaries, the
ratio of EBITDA LESS Capital Expenditures DIVIDED BY Fixed Charges for the four
quarter period ending on such day to Fixed Charges for the four quarter period
ending on such day; PROVIDED THAT for purposes of the above formula, the
Borrower's Capital Expenditures for each fiscal quarter in the year 2000 shall
be deemed to be $1,500,000 irrespective of the actual amount incurred by the
Borrower and its Subsidiaries during that time.
"FIXED CHARGES": for any period, the sum, for the Borrower and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (i) Debt Service for such period, (ii)
the aggregate amount of any Cash Dividends paid during such period in respect of
any Capital Stock of the Borrower or any of its Subsidiaries, (iii) Cash Income
Taxes for such period and (iv) Earn-out Payments for such period.
"FUNDED DEBT": the sum of the outstanding principal balance of all
Indebtedness (including, but not limited to, Indebtedness to the Lenders and
Capitalized Lease Obligations) of Borrower and its Subsidiaries on a
consolidated basis.
"GAAP": generally accepted accounting principles in the United States
in effect from time to time.
"GOVERNMENTAL AUTHORITY": any nation or government, any federal, state
or other political subdivision thereof and any federal, state or local entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"),
any obligation (without duplication) of (a) the guaranteeing person or (b)
another Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the "PRIMARY OBLIGATIONS") of any other third Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds for the purchase or payment of any such primary obligation or to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
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<PAGE>
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; PROVIDED, HOWEVER, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lesser of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"GUARANTEES": the Second Amended and Restated Guarantees made by each
of VDIMI and Multi-Media and all other guarantees executed by a Guarantor in
favor of the Agent for the benefit of the Lenders, in form and substance
reasonably satisfactory to the Agent, as the same may be amended or modified
from time to time in accordance with the terms hereof.
"GUARANTOR COLLATERAL": all of the property (tangible or intangible)
purported to be subject to the lien or security interest purported to be created
by any mortgage, deed of trust, security agreement, pledge agreement, assignment
or other security document heretofore or hereafter executed by any Guarantor as
security for all or part of the Obligations or the Guarantees.
"GUARANTOR COLLATERAL DOCUMENTS": the Guarantor Security Agreements,
all notices of security interests in deposit accounts requested by the Agent
pursuant to the Guarantor Security Agreements, all Form UCC-1 Financing
Statements and amendments thereto and any other document encumbering the
Guarantor Collateral or evidencing or perfecting a security interest therein for
the benefit of the Lenders executed by any Guarantor.
"GUARANTOR SECURITY AGREEMENTS": the security agreements, in form and
substance reasonably satisfactory to the Agent, made by each Subsidiary in favor
of the Agent, for the benefit of the Lenders, as the same may be amended from
time to time in accordance with the terms hereof.
"GUARANTORS": each Subsidiary.
"HAZARDOUS MATERIAL": collectively, (a) any petroleum or petroleum
products, flammable materials, explosives, radioactive materials, asbestos, urea
formaldehyde foam insulation, and transformers or other equipment that contain
polychlorinated biphenyls ("PCB'S"), (b) any chemicals or other materials or
substances that are now or hereafter become defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "contaminants", "pollutants" or words of similar import
under any Environmental Control Statute and (c) any other chemical or other
material or substance, exposure to which is now or hereafter prohibited, limited
or regulated under any Environmental Control Statute.
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<PAGE>
"INDEBTEDNESS": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than trade liabilities (other than for
borrowed money) incurred in the ordinary course of business so long as such
trade liabilities are payable within 90 days of the date the respective goods
are delivered or the respective services are rendered) or which is evidenced by
a note, bond, debenture or similar instrument, (b) all obligations of such
Person under Capitalized Lease Obligations, (c) all obligations of such Person
in respect of acceptances issued or created for the account of such Person, (d)
all liabilities secured by any Lien on any property owned by such Person even
though such Person has not assumed or otherwise become liable for the payment
thereof, (e) all obligations of such Person, whether absolute or contingent, in
respect of letters of credit opened for the account of such Person (other than
any letters of credit opened for the purpose of facilitating the purchase of
goods and services in the ordinary course of business and having a term of not
more than 360 days), (f) all obligations of such Person under Non-Compete
Agreements and (g) all Guarantee Obligations of such Person in respect of any
indebtedness, obligations or liabilities of any other Person of the type
referred to in clauses (a) through (g) of this definition.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INTEREST EXPENSE": for any period, the sum, for the Borrower and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (i) all interest on Funded Debt
(including, without limitation, the interest component of any payments in
respect of Capitalized Lease Obligations) which was paid, payable and/or accrued
for such period and (ii) all commitment, letter of credit or line of credit fees
paid, payable and/or accrued for such period (without duplication of previous
amounts) to any lender in exchange for such lender's commitment to lend.
"INTEREST PAYMENT DATE": (a) as to any Base Rate Loan, the last day of
each month (commencing October 31, 2000) while the Loans are outstanding, (b) as
to any LIBOR Loan having an Interest Period of three months or less, the last
day of such Interest Period, (c) as to any LIBOR Loan having an Interest Period
longer than three months, each day which is at the end of each three
month-period within such Interest Period after the first day of such Interest
Period and the last day of such Interest Period and (d) for each of (a), (b) and
(c) above, on the day on which the Term Loans and the Revolving Loans become due
and payable in full and are paid or prepaid in full.
"INTEREST PERIOD": with respect to any LIBOR Loan:
(a) initially, the period commencing on the borrowing or conversion
date, as the case may be, with respect to such LIBOR Loan and ending one, two,
three, or six months thereafter, as selected by the Borrower in its Borrowing
Notice or Continuation Notice, as the case may be, given with respect thereto;
and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such LIBOR Loan and ending one, two,
three, or six months thereafter, as
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<PAGE>
selected by the Borrower by irrevocable notice to the Agent not less than three
Eurodollar Business Days prior to the last day of the then current Interest
Period with respect thereto;
PROVIDED THAT, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period pertaining to a LIBOR Loan
would otherwise end on a day that is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately preceding Business
Day;
(ii) any Interest Period that would otherwise extend
beyond the date final payment is due on the Revolving Loans, as applicable,
shall end on the date of such final payment; and
(iii) any Interest Period pertaining to a LIBOR Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar month.
"INTEREST RATE PROTECTION AGREEMENT": shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, or
interest rate hedging agreement or other similar agreement or arrangement.
"INVENTORY": shall mean all "inventory" (as such term is defined in the
UCC), now or hereafter owned or acquired by the Borrower or any Domestic
Subsidiary, wherever located, including all inventory, merchandise, goods and
other personal property which are held by or on behalf of the Borrower or any
Domestic Subsidiary for sale or lease or are furnished or are to be furnished
under a contract of service or which constitute raw materials, work in process
or materials used or consumed or to be used or consumed in the Borrower's or
such Domestic Subsidiary's business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including other supplies.
"INVENTORY VALUE": as the date of determination thereof, the lower of
cost or market value of the Eligible Inventory wholly-owned by Borrower or any
Domestic Subsidiary as determined on an aggregate basis in accordance with GAAP.
"INVESTMENT": as defined in Section 6.7.
"LANDLORD CONSENT": a waiver and consent, in form and substance
reasonably satisfactory to the Agent, of each Person who is the owner of real
property leased to the Borrower or any Guarantor.
"LENDERS": as defined in the preamble hereto and Section 8.8.
"LETTER OF CREDIT": as defined in Section 2.1(a).
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<PAGE>
"LETTER OF CREDIT AMOUNT": the stated maximum amount available to be
drawn under a particular Letter of Credit, as such amount may be reduced or
reinstated from time to time in accordance with the terms of such Letter of
Credit.
"LETTER OF CREDIT REQUEST": a request by the Borrower for the issuance
of a Letter of Credit, on the Agent's standard form of Application for
Irrevocable Standby Letter of Credit, the current form of which is attached
hereto as Exhibit D, and containing terms and conditions satisfactory to the
Agent in its sole discretion.
"LIBOR": with respect to each day during each Interest Period
pertaining to a LIBOR Loan, the rate of interest determined by the Agent to be
the rate per annum at which deposits in dollars would be offered to the Agent by
leading banks in the London Interbank Market at or about 9:00 a.m., Los Angeles
time, two Eurodollar Business Days prior to the beginning of such Interest
Period, for delivery on the first day of such Interest Period for the number of
days comprised therein and in an amount comparable to the amount of its LIBOR
Loan to be outstanding during such Interest Period.
"LIBOR ADJUSTED RATE": with respect to each day during each Interest
Period pertaining to a LIBOR Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):
<TABLE>
<S> <C>
LIBOR
---------------------------------
1.00 - LIBOR Reserve Requirements
</TABLE>
"LIBOR LOANS": Loans the rate of interest applicable to which is based
upon LIBOR.
"LIBOR RESERVE REQUIREMENTS": for any day as applied to a LIBOR Loan,
the aggregate (without duplication) of the maximum rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such Federal Reserve System.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any Capitalized Lease Obligation having substantially the
same economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).
"LOAN": a Revolving Loan.
"LOAN COMMITMENT": with respect to each Lender having a Loan
Commitment, its commitment listed as its "Loan Commitment" in Schedule 2.1 to
make Revolving Loans and
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participate in Letters of Credit hereunder through its Applicable Lending
Office, as the same shall be adjusted from time to time pursuant to this
Agreement.
"LOAN COMMITMENT EXPIRATION DATE": the earlier of (i) that certain date
falling five years and three months following the Restatement Date and (ii)
December 31, 2005.
"LOAN COMMITMENT PERCENTAGE": with respect to each Revolving Loan
Lender, the percentage equivalent of the ratio which such Revolving Loan
Lender's Loan Commitment bears to the Aggregate Commitment, as such Revolving
Loan Lender's Loan Commitment and the Aggregate Commitment may be adjusted from
time to time pursuant to the terms hereof.
"LOAN DOCUMENTS": this Agreement, the Notes, any Letter of Credit
Requests that are executed by the Borrower, the Collateral Documents, the ADR
Agreement, the Landlord Consents, the Guarantor Collateral Documents and the
Guarantees and any other agreement executed by an Obligor in connection
therewith and herewith including, but not limited to, UCC-1 Financing Statements
and amendments thereto, as such agreements and documents may be amended,
supplemented and otherwise modified from time to time in accordance with the
terms hereof.
"MAJORITY LENDERS": Lenders having at least 51% of the sum of (a) the
Aggregate Available Loan Commitment at such time PLUS (b) the aggregate
outstanding principal amount of the Revolving Loans PLUS (c) the aggregate
amount of all participations purchased by Lenders in any outstanding Letters of
Credit and unreimbursed drawings under Letters of Credit at such time, PROVIDED
THAT during any such time as UBOC alone would otherwise constitute a Majority
Lender under the definition set forth above, "Majority Lenders" shall be deemed
to refer to UBOC and at least one other Lender.
"MARGIN STOCK": as defined in Regulation U.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, operations, property, financial condition, prospects, liabilities of
the Borrower and its Subsidiaries taken as a whole, (b) the ability of any
Obligor to perform its respective obligations under the Loan Documents, (c) the
validity or enforceability of any of the Loan Documents or the rights or
remedies of the Agent and the Lenders hereunder or thereunder or (d) the timely
payment of the principal of or interest on the Loans or other amounts payable in
connection therewith.
"MATERIAL CONTRACTS": each contract and agreement, including, but not
limited to, site leases and licenses, material to the financial condition or
operation of the Borrower or any Subsidiary.
"MULTI-MEDIA": Multi-Media Services, Inc., a California corporation.
"MULTIEMPLOYER PLAN": a plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NET BOOK VALUE": net book value as determined in accordance with GAAP.
"NET INCOME": net income as determined in accordance with GAAP.
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<PAGE>
"NET PROCEEDS": (A) with respect to any Asset Disposition, the net
amount equal to the aggregate amount received in cash (including any cash
received by way of deferred payment pursuant to a note receivable, other
non-cash consideration or otherwise, but only as and when such cash is so
received) in connection with such Asset Disposition MINUS the sum of (a) the
reasonable fees, commissions and other out-of-pocket expenses incurred by the
Borrower or any of its Subsidiaries in connection with such Asset Disposition
(other than amounts payable to Affiliates of the Person making such
disposition), (b) Indebtedness, other than the Loans, required to be paid as a
result of such Asset Disposition and (c) federal, state and local taxes incurred
and paid in connection with such Asset Disposition; and (B) with respect to any
Equity Offering, the net amount equal to the aggregate amount received in cash
(including any cash received by way of deferred payment pursuant to a note
receivable, other non-cash consideration or otherwise, but only as and when such
cash is so received) in connection with such Equity Offering MINUS the
reasonable fees, commissions and other out-of-pocket expenses incurred by the
Borrower in connection with such Equity Offering (other than amounts payable to
Affiliates of the Person making such Equity Offering).
"NET WORTH": net worth as determined in accordance with GAAP.
"NET WORTH REQUIREMENT": $35,000,000 as of June 30, 2000, and as shall
subsequently be increased on a quarterly basis by an amount equal to 90% of the
Borrower's consolidated Net Income and 100% of the Borrower's and its
Subsidiaries' New Equity less any and all amounts expended by the Borrower and
its Subsidiaries for Permitted Repurchases.
"NEW EQUITY": the value of all proceeds received by the Borrower from
any Equity Offering after June 30, 2000.
"NON-COMPETE AGREEMENTS": all agreements pursuant to which the Borrower
or any Subsidiary has agreed to make payments (whether in cash or in kind) to
another Person for the agreement of such Person not to compete with the Borrower
or such Subsidiary in a given area.
"NOTE" AND "NOTES": as defined in Section 2.1(c).
"OBLIGATIONS": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity the Revolving Loans and
interest accruing on or after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding and whether or not at a default rate) the Notes,
the obligation to reimburse drawings under Letters of Credit (including the
contingent obligation to reimburse any drawings under outstanding Letters of
Credit) and all other obligations and liabilities of the Obligors to the Agent
and the Lenders, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, the Notes, the Letters of Credit, any
other Loan Document and any other document made, delivered or given in
connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all reasonable fees and disbursements of counsel (including
the allocated reasonable cost of internal counsel) to the Agent or the
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<PAGE>
Lenders that are required to be paid by the Borrower pursuant to the terms of
this Agreement) or otherwise.
"OBLIGOR": the Borrower, each Guarantor and any other Person (other
than the Agent or a Lender) obligated under any Loan Document.
"OPERATING MACHINERY AND EQUIPMENT": the Net Book Value of all of the
machinery and equipment set forth in the notes to the Borrower's consolidated
balance sheet, as determined in accordance with GAAP consistently applied.
"OPERATING MACHINERY AND EQUIPMENT VALUE": at the date of determination
thereof, the Net Book Value for all Operating Machinery and Equipment owned by
the Borrower and its Domestic Subsidiaries, as determined in accordance with
GAAP consistently applied.
"ORGANIC DOCUMENTS": relative to any entity, its certificate or
articles of incorporation or organization, its by-laws or operating agreement,
any Equityholder Agreements, its partnership agreement, and any other agreements
or documents relating to the control or management of any such entity (whether
existing as corporation, a partnership, a limited liability company or
otherwise).
"PARTICIPANT": as defined in Section 9.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA or any successor thereto.
"PERMITTED ACQUISITION": an Acquisition where (a) the Person whose
assets or equity interest is being acquired has positive PRO FORMA EBITDA during
the twelve month period immediately prior to the closing of such Acquisition,
(b) the Borrower and each Subsidiary shall be in full compliance with each
financial covenant contained in this Agreement immediately prior to and upon the
closing of the Acquisition, (c) with respect to an Acquisition involving
aggregate cash and non-cash consideration less than or equal to $3,000,000, the
Lenders have received at least ten Business Days Notice prior to the closing of
the Acquisition and an executed Covenant Compliance Certificate, (d) with
respect to any Acquisition involving aggregate cash and non-cash consideration
exceeding $3,000,000, such Acquisition shall have received the approval of the
Majority Lenders, which approval shall not be unreasonably withheld or delayed;
and (e) with respect to an Acquisition involving a public company, such
Acquisition shall not have been opposed by the board of directors of the target
entity or otherwise be deemed by the Agent, in the exercise of the Agent's
reasonable discretion, to be a hostile Acquisition.
"PERMITTED REPURCHASES": repurchases or redemptions of the Capital
Stock of the Borrower in an aggregate amount not to exceed $5,000,000; PROVIDED
THAT both immediately prior to and after giving effect to any repurchase or
redemption of the Capital Stock of the Borrower that would result in the
aggregate amount of such repurchases or redemptions exceeding $3,000,000 there
shall be at least $1,000,000 of Available Commitment.
"PERSON": any individual, firm, partnership, joint venture,
corporation, association, limited liability company, business enterprise trust,
unincorporated organization, government or
17
<PAGE>
department or agency thereof or other entity, whether acting in an individual,
fiduciary or other capacity.
"PLAN": as to any Person, any plan (other than a Multiemployer Plan)
subject to Title IV of ERISA maintained for employees of such Person or any
ERISA Affiliate of such Person (and any such plan no longer maintained by such
Person or any of such Person's ERISA Affiliates to which such Person or any of
such Person's ERISA Affiliates has made or was required to make any
contributions within any of the five preceding years).
"PROHIBITED TRANSACTION": with respect to any Plan, a prohibited
transaction (as defined in Section 406 of ERISA) with respect to such Plan.
"PROPERTIES": the collective reference to the real and personal
(tangible and intangible) property owned, leased, used, occupied or operated,
under license or permit by the Obligors.
"PURCHASING LENDERS": as defined in Section 9.6(c).
"REFERENCE RATE": the rate of interest per annum publicly announced
from time to time by Union Bank of California, N.A. as its "reference rate" in
effect at its office in Los Angeles, California. Any change in the Reference
Rate shall be effective on the effective date specified in the public
announcement of such change. The Reference Rate is an index rate determined by
UBOC from time to time as a means of pricing certain extensions of credit and is
neither directly tied to any external rate of interest or index nor necessarily
the lowest rate of interest charged by UBOC at any given time.
"REGISTER": as defined in Section 9.6(d).
"REGULATION D": Regulation D of the Board of Governors of the Federal
Reserve System, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof and any successor regulation
thereto.
"REGULATION U": Regulation U of the Board of Governors of the Federal
Reserve System, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof and any successor regulation
thereto.
"REORGANIZATION": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under PBGC regulations.
"REPURCHASE BASKET": as defined in Section 2.1(a).
"REQUIREMENT OF LAW": as to any Person, the Organic Documents of such
Person, and any law, treaty, rule or regulation, determination or policy
statement or interpretation of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
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<PAGE>
"RESPONSIBLE OFFICER": with respect to the Borrower or any Subsidiary,
the chief executive officer or the president, or, with respect to financial
matters, the chief financial officer, treasurer or controller of such entity.
"RESTATEMENT DATE": the date on which the conditions precedent set
forth in Section 4.1 have been satisfied.
"RESTRICTED PAYMENTS": as defined in Section 6.6.
"REVOLVING LOAN": as defined in Section 2.1(a).
"REVOLVING LOAN LENDER": each Lender having a Loan Commitment and/or
which shall have (i) Revolving Loans outstanding and/or (ii) participations in
Letters of Credit which are outstanding.
"SECURITY AGREEMENT": the Second Amended and Restated Security
Agreement in form and substance reasonably satisfactory to the Agent made by the
Borrower in favor of the Agent, for the benefit of the Lenders, in respect of
the tangible and intangible personal property of the Borrower described therein,
as the same may be amended from time to time in accordance with the terms
hereof.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"SOLVENT": when used with respect to any Person, that:
(i) the present fair salable value of such Person's assets
is in excess of the total amount of the probable liability on such Person's
liabilities;
(ii) such Person is able to pay its debts as they become
due;
(iii) such Person does not have unreasonably small capital
to carry on such Person's business as theretofore operated and all businesses in
which such Person is about to engage; and
(iv) such Person is not otherwise insolvent as defined in
Section 3439.02 of the California Civil Code and as defined in 11 U.S.C. Section
101 (32) of the Bankruptcy Code.
"SUBSIDIARY": as to any Person at any time of determination, a
corporation, partnership or other entity of which shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions of such
corporation, partnership or other entity (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries or Subsidiaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
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"TAXES": as defined in Section 2.14.
"TERMINATION EVENT": (i) a Reportable Event, (ii) the institution of
proceedings to terminate a Single Employer Plan by the PBGC under Section 4042
of ERISA, (iii) the appointment by the PBGC of a trustee to administer any
Single Employer Plan or (iv) the existence of any other event or condition that
would reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment by the PBGC of a trustee to
administer, any Single Employer Plan.
"TRANCHE": the collective reference to LIBOR Loans the Interest Periods
with respect to all of which begin on the same date and end on the same later
date (whether or not such LIBOR Loans shall originally have been made on the
same day).
"TRANSFEREE": as defined in Section 9.6(f).
"TYPE": as to any Revolving Loan, its nature as a Base Rate Loan or a
LIBOR Loan.
"UBOC": as defined in the Recitals hereto.
"UCC": the Uniform Commercial Code as the same may be in effect from
time to time in the State of California.
"VDIMI": VDI Multimedia, Inc., a Delaware corporation.
"WHOLLY OWNED SUBSIDIARY": with respect to any Person, any corporation,
partnership or other entity of which all of the equity securities or other
ownership interests (other than, in the case of a corporation, directors'
qualifying shares) are directly or indirectly owned or controlled by such Person
or one or more Wholly Owned Subsidiaries of such Person.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have such defined meanings when used in the Notes, any other
Loan Document or any certificate or other document made or delivered pursuant
hereto or thereto.
(b) As used herein, in the Notes, in any other Loan Document, and in
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in Section 1.1 and accounting terms partly defined
in Section 1.1, to the extent not defined, shall have the respective meanings
given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
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(e) For the purpose of determining financial covenant compliance
hereunder for any period, acquisitions (including with respect to Permitted
Acquisitions pursuant to Section 6.4(a)), divestitures, and asset sales
occurring during such period (or intended to occur during such period in the
case of a potential Permitted Acquisition) will be included in the calculations
for such period on a pro forma basis, and will be deemed to have occurred on the
first day of such period.
SECTION 2. AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT; COMMITMENT
AMOUNTS
2.1 REVOLVING LOANS AND LETTERS OF CREDIT; LOAN COMMITMENT AMOUNTS.
(a) Subject to the terms and conditions hereof, each Lender having a
Loan Commitment severally agrees to (i) make loans on a revolving credit basis
through its Applicable Lending Office to the Borrower from time to time from and
including the Restatement Date to but excluding the Loan Commitment Expiration
Date (each a "REVOLVING LOAN", and collectively, the "REVOLVING LOANS") in
accordance with the provisions of this Agreement and (ii) participate through
its Applicable Lending Office in standby letters of credit issued for the
account of the Borrower pursuant to Section 2.3 from time to time from and
including the Restatement Date to but excluding the Loan Commitment Expiration
Date (each a "LETTER OF CREDIT", and collectively, the "LETTERS OF CREDIT");
PROVIDED, HOWEVER, that the sum of (A) the aggregate principal amount of all
Revolving Loans outstanding, (B) the aggregate Letter of Credit Amount of all
Letters of Credit outstanding and (C) the aggregate amount of unreimbursed
drawings under all Letters of Credit shall not exceed the lesser of the
Aggregate Commitment or the Borrowing Base at any time; and PROVIDED FURTHER,
that the sum of (x) the aggregate Letter of Credit Amount of all Letters of
Credit outstanding and (y) the aggregate amount of unreimbursed drawings under
all Letters of Credit shall not exceed $1,000,000 at any time; and PROVIDED
FURTHER, that the Borrower may borrow up to an aggregate $3,000,000 in excess of
the Borrowing Base as then in effect (the "REPURCHASE BASKET") so long as such
funds are (i) used for Permitted Repurchases, and (ii) once borrowed, such funds
may not be repaid and reborrowed (provided that in no case shall the Aggregate
Commitment be exceeded), and PROVIDED FURTHER that other than Revolving Loans
borrowed pursuant to the Repurchase Basket, Revolving Loans borrowed to be used
for Permitted Repurchases may only be borrowed if after giving effect to such
borrowing the sum of all outstanding Loans and Letters of Credit under this
Agreement does not exceed (x) the Aggregate Commitment or (y) the Borrowing Base
MINUS $1,000,000; PROVIDED FURTHER, that the aggregate borrowings permitted
under the Repurchase Basket shall not be permitted to exceed $1,500,000 on or
after March 31, 2002 and shall reduce to zero after March 31, 2003. Within the
limits of each Revolving Loan Lender's Loan Commitment, the Borrower may borrow,
have Letters of Credit issued for the Borrower's account, prepay Revolving
Loans, reborrow Revolving Loans, and have additional Letters of Credit issued
for the Borrower's account after the expiration of previously issued Letters of
Credit.
The principal amount of each Revolving Loan Lender's (A) Revolving Loan
and (B) participation in a Letter of Credit shall be in an amount equal to the
product of (i) such Revolving Loan Lender's Loan Commitment Percentage and (ii)
the total amount of the Revolving Loan or Revolving Loans, or the Letter of
Credit or Letters of Credit, requested;
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PROVIDED THAT in no event shall any Revolving Loan Lender be obligated to make a
Revolving Loan or participate in a Letter of Credit if after giving effect to
such Revolving Loan or such participation the sum of such Revolving Loan
Lender's (x) Revolving Loans outstanding, (y) Loan Commitment Percentage of the
aggregate Letter of Credit Amount of all Letters of Credit outstanding and (z)
Loan Commitment Percentage of the aggregate amount of unreimbursed drawings
under all Letters of Credit would exceed its Loan Commitment or if the amount of
such requested Revolving Loan or such Revolving Loan Lender's Loan Commitment
Percentage of such Letter of Credit is in excess of such Revolving Loan Lender's
Available Loan Commitment.
(b) Subject to Sections 2.10 and 2.12, the Revolving Loans may from
time to time be (i) LIBOR Loans, (ii) Base Rate Loans or (iii) a combination
thereof, as determined by the Borrower and notified to the Agent in accordance
with either Section 2.1(e) or 2.6. Each Revolving Loan Lender may make or
maintain its Revolving Loans or participate in Letters of Credit to or for the
account of the Borrower by or through any Applicable Lending Office.
(c) The Revolving Loans made by each Revolving Loan Lender to the
Borrower shall be evidenced by a promissory note of the Borrower, substantially
in the form of Exhibit A (a "NOTE"), with appropriate insertions therein as to
payee, date and principal amount, payable to the order of such Revolving Loan
Lender and representing the obligations of the Borrower to pay the aggregate
unpaid principal amount of all Revolving Loans made by such Revolving Loan
Lender to the Borrower pursuant to Section 2.1(a) or 2.3(c), with interest
thereon as prescribed in Sections 2.8 and 2.9. Each Revolving Loan Lender is
hereby authorized (but not required) to record the date and amount of each
payment or prepayment of principal of its Revolving Loans made to the Borrower,
each continuation thereof, each conversion of all or a portion thereof to
another Type and, in the case of LIBOR Loans, the length of each Interest Period
with respect thereto, in the books and records of such Revolving Loan Lender,
and any such recordation shall constitute PRIMA FACIE evidence of the accuracy
of the information so recorded. The failure of any Revolving Loan Lender to make
any such recordation or notation in the books and records of the Revolving Loan
Lender (or any error in such recordation or notation) shall not affect the
obligations of the Borrower hereunder or under the Notes. Each Note shall (i) be
dated the Restatement Date, (ii) provide for the payment of interest in
accordance with Sections 2.8 and 2.9 and (iii) be stated to be payable in full
on the Loan Commitment Expiration Date.
(d) On each date set forth below, the Aggregate Commitment shall
automatically reduce to the corresponding amount set forth below:
<TABLE>
<CAPTION>
REMAINING AGGREGATE
EFFECTIVE DATE OF REDUCTION COMMITMENT
--------------------------- -------------------
<S> <C>
December 31, 2002 $40,000,000
December 31, 2003 $35,000,000
December 31, 2004 $30,000,000
December 31, 2005 $0.00
</TABLE>
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All outstanding Loans shall be due and payable, to the extent not previously
paid in accordance with the terms hereof, on the Loan Commitment Expiration
Date. The aggregate amount payable to any Lender on any date set forth in this
Section 2.1(d) shall be determined in accordance with Section 2.11
(e) The Borrower shall give the Agent irrevocable written notice,
substantially in the form of a Borrowing Notice (which Borrowing Notice must be
received by the Agent prior to 10:00 A.M., Los Angeles time, one Business Day
prior to each proposed borrowing date or, if all or any part of the Revolving
Loans are requested to be made as LIBOR Loans, three Eurodollar Business Days
prior to each proposed borrowing date) requesting that the Revolving Loan
Lenders make the Revolving Loans on the proposed borrowing date and specifying
(i) the aggregate amount of Revolving Loans requested to be made, (ii) whether
the Revolving Loans are to be LIBOR Loans, Base Rate Loans or a combination
thereof and (iii) if the Revolving Loans are to be entirely or partly LIBOR
Loans, the respective amounts of each such Type of Revolving Loan and the
respective lengths of the initial Interest Periods therefor. On receipt of such
Borrowing Notice, the Agent shall promptly notify each Revolving Loan Lender
thereof. On the proposed borrowing date, not later than 10:00 A.M., Los Angeles
time, each Revolving Loan Lender shall make available to the Agent at its office
specified in Section 9.2 the amount of such Revolving Loan Lender's pro rata
share of the aggregate borrowing amount (as determined in accordance with the
second paragraph of Section 2.1(a)) in immediately available funds. The Agent
may, in the absence of notification from any Revolving Loan Lender that such
Revolving Loan Lender has not made its pro rata share available to the Agent, on
such date, credit the account of the Borrower on the books of such office of the
Agent with the aggregate amount of Revolving Loans.
(f) Neither the Agent nor any Revolving Loan Lender shall be
responsible for the obligation or Available Loan Commitment of any other
Revolving Loan Lender hereunder, nor will the failure of any Revolving Loan
Lender to comply with the terms of this Agreement relieve any other Revolving
Loan Lender or the Borrower of their obligations under this Agreement and the
Notes. Nothing herein shall be deemed to relieve any Revolving Loan Lender from
its obligation to fulfill its Commitments hereunder or to prejudice any rights
which the Borrower may have against any Revolving Loan Lender as a result of any
default by such Revolving Loan Lender hereunder.
(g) The Loan Commitment of each Revolving Loan Lender and the Aggregate
Commitment shall terminate on the Loan Commitment Expiration Date. All
outstanding Revolving Loans shall be due and payable on the Loan Commitment
Expiration Date.
2.2 RESERVED.
2.3 ISSUANCE OF LETTERS OF CREDIT.(a) The Borrower shall be entitled to
request the issuance of Letters of Credit from time to time from and including
the Restatement Date to but excluding the date which is two Business Days prior
to the Loan Commitment Expiration Date, by giving the Agent a Letter of Credit
Request at least three Business Days before the requested date of issuance of
such Letter of Credit (which shall be a Business Day). Any Letter of Credit
Request received by the Agent later than 10:00 a.m., Los Angeles time, shall be
deemed to have been received on the next Business Day. Each Letter of Credit
Request shall be made in writing,
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shall be signed by a Responsible Officer, shall be irrevocable and shall be
effective upon receipt by the Agent. Provided that a valid Letter of Credit
Request has been received by the Agent and upon fulfillment of the other
applicable conditions set forth in Section 4.2, the Agent will issue the
requested Letter of Credit from its office specified in Section 9.2. No Letter
of Credit shall have an expiration date later than two Business Days prior to
the Loan Commitment Expiration Date.
(b) Immediately upon the issuance of each Letter of Credit, the Agent
shall be deemed to have sold and transferred to each Revolving Loan Lender, and
each Revolving Loan Lender shall be deemed to have purchased and received from
the Agent, in each case irrevocably and without any further action by any party,
an undivided interest and participation in such Letter of Credit, each drawing
thereunder and the obligations of the Borrower under this Agreement in respect
thereof in an amount equal to the product of (i) such Revolving Loan Lender's
Loan Commitment Percentage and (ii) the maximum amount available to be drawn
under such Letter of Credit (assuming compliance with all conditions to
drawing). The Agent shall promptly advise each Revolving Loan Lender of the
issuance of each Letter of Credit, the Letter of Credit Amount of such Letter of
Credit, any change in the face amount or expiration date of such Letter of
Credit, the cancellation or other termination of such Letter of Credit and any
drawing under such Letter of Credit.
(c) The payment by the Agent of a draft drawn under any Letter of
Credit shall first be made from any Cash Collateral Deposit held by the Agent
with respect to such Letter of Credit. After any such Cash Collateral Deposit
has been applied, the payment by the Agent of a draft drawn under any Letter of
Credit shall constitute for all purposes of this Agreement the making by the
Agent in its individual capacity as a Lender hereunder (in such capacity, the
"DRAWING LENDER") of a Base Rate Loan in the amount of such payment (but without
any requirement of compliance with the conditions set forth in Section 4.2). In
the event that any such Loan by the Drawing Lender resulting from a drawing
under any Letter of Credit is not repaid by the Borrower by 12:00 noon, Los
Angeles time, on the day of payment of such drawing, the Agent shall promptly
notify each other Revolving Loan Lender. Each Revolving Loan Lender shall, on
the day of such notification (or if such notification is not given by 3:00 p.m.,
Los Angeles time, on such day, then on the next succeeding Business Day), make a
Base Rate Loan, which shall be used to repay the applicable portion of the Base
Rate Loan of the Drawing Lender with respect to such Letter of Credit drawing,
in an amount equal to the amount of such Revolving Loan Lender's participation
in such drawing for application to repay the Drawing Lender (but without any
requirement of compliance with the applicable conditions set forth in Section
4.2) and shall deliver to the Agent for the account of the Drawing Lender, on
the day of such notification (or if such notification is not given by 3:00 p.m.,
Los Angeles time, on such day, then on the next succeeding Business Day) and in
immediately available funds, the amount of such Base Rate Loan. In the event
that any Revolving Loan Lender fails to make available to the Agent for the
account of the Drawing Lender the amount of such Base Rate Loan, the Drawing
Lender shall be entitled to recover such amount on demand from such Revolving
Loan Lender together with interest thereon at the Federal Funds Effective Rate
for each day such amount remains outstanding.
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(d) The obligations of the Borrower with respect to any Letter of
Credit, any Letter of Credit Request and any other agreement or instrument
relating to any Letter of Credit and any Base Rate Loan issued or made under
this Agreement shall be absolute, unconditional and irrevocable and shall be
paid strictly in accordance with the terms of the aforementioned documents under
all circumstances, including the following:
(i) any lack of validity or enforceability of any Letter
of Credit, this Agreement or any other Loan Document;
(ii) the existence of any claim, setoff, defense or other
right that the Borrower may have at any time against any beneficiary or
transferee of any Letter of Credit (or any Person for whom any such beneficiary
or transferee may be acting), the Agent, any Lender (other than the defense of
payment to a Lender in accordance with the terms of this Agreement) or any other
Person, whether in connection with this Agreement, any other Loan Document, the
transactions contemplated hereby or thereby or any unrelated transaction;
(iii) any statement or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect, or any statement therein being untrue or inaccurate in any respect
whatsoever; PROVIDED THAT payment by the Agent under the applicable Letter of
Credit shall not have constituted gross negligence or willful misconduct of the
Agent under the circumstances in question, as determined by a final
determination of a referee in accordance with the terms of the ADR Agreement;
and
(iv) any exchange, release or nonperfection of any
Collateral or other collateral, or any release, amendment or waiver of or
consent to departure from any Guarantee, other Loan Document or other guaranty,
for any of the Obligations of the Borrower in respect of the Letters of Credit.
(e) The Borrower shall pay to the Agent for the account of the
Revolving Loan Lenders with respect to each Letter of Credit issued hereunder,
for the period from and including the day such Letter of Credit is issued to but
excluding the day such Letter of Credit expires, a letter of credit fee equal to
the product of (i) the Applicable LIBOR Margin and (ii) the Letter of Credit
Amount of such Letter of Credit from time to time, such letter of credit fee to
be payable quarterly in arrears on the last day of each March, June, September
and December and on the expiration date of such Letter of Credit.
(f) The Borrower shall pay to the Agent for its own account, with
respect to each Letter of Credit issued hereunder, (i) for the period from and
including the day such Letter of Credit is issued to but excluding the day such
Letter of Credit expires, a fronting fee in respect of each Letter of Credit in
an amount equal to 1/4 of 1% per annum of the Letter of Credit Amount of such
Letter of Credit from time to time, such fronting fee to be payable quarterly in
arrears on the last day of each March, June, September and December and on the
expiration date of such Letter of Credit and (ii) from time to time such
additional fees and charges (including cable charges) as are generally
associated with letters of credit, in accordance with the Agent's standard
internal charge guidelines and the related Letter of Credit Request.
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<PAGE>
(g) The Borrower agrees to the provisions in the Letter of Credit
Request form; PROVIDED, HOWEVER, that the terms of the Loan Documents shall take
precedence if there is any inconsistency between the terms of the Loan Documents
and the terms of said form.
(h) The Borrower assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to its use of
such Letter of Credit. Neither the Agent nor any Lender nor any of their
respective officers or directors shall be liable or responsible for (i) the use
that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; or (ii) the validity,
sufficiency or genuineness of documents, or of any endorsement thereof, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; PROVIDED THAT, with respect to clause (ii) of this Section
2.3(h), the Borrower shall retain any and all rights it may have against the
Agent for any liability arising out of the gross negligence or willful
misconduct of the Agent, as determined by a final determination of a referee in
accordance with the terms of the ADR Agreement. In furtherance and not in
limitation of the foregoing, the Agent may accept any document that appears on
its face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
(i) The Borrower hereby indemnifies and holds harmless each Revolving
Loan Lender and the Agent from and against any and all claims and damages,
losses, liabilities, costs or expenses that such Lender or the Agent may incur
(or that may be claimed against such Lender or the Agent by any Person
whatsoever) by reason of or in connection with the execution and delivery or
transfer of or payment or refusal to pay by the Agent, as issuer of any Letter
of Credit; PROVIDED THAT the Borrower shall not be required to indemnify any
Lender or the Agent for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (x) the willful
misconduct or gross negligence of the Agent, as issuer of such Letter of Credit,
in determining whether a request presented under any Letter of Credit complied
with the terms of such Letter of Credit or (y) in the case of the Agent, as
issuer of such Letter of Credit, the Agent's failure to pay under any Letter of
Credit after the presentation to it of a request strictly complying with the
terms and conditions of such Letter of Credit. Nothing in this Section 2.3 is
intended to limit the other obligations of the Borrower, any Lender, or the
Agent under this Agreement.
2.4 OPTIONAL PREPAYMENTS. The Borrower may at any time and from time to
time, prepay the Loans, in whole or in part, without premium or penalty, upon at
least three Business Days' irrevocable written notice, in the case of LIBOR
Loans, and upon at least one Business Day's irrevocable written notice, in the
case of Base Rate Loans, from the Borrower to the Agent, specifying the date and
amount of prepayment and whether the prepayment is of LIBOR Loans, Base Rate
Loans or a combination thereof, and, if of a combination thereof, the amount
allocable to each. Upon receipt of any such notice from the Borrower, the Agent
shall promptly notify each Lender thereof. If any such notice is given, the
amount specified in such notice shall be due and payable by the Borrower on the
date specified therein, together with accrued interest to such date on the
amount prepaid and any amounts payable pursuant to Section 2.15. Partial
prepayments of the Revolving Loans shall be in an aggregate principal amount of
$250,000 and integral multiples of $100,000 in excess thereof.
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2.5 MANDATORY PREPAYMENTS.
(a) On the day of receipt by the Borrower or any of its Subsidiaries of
any Net Proceeds with respect to an Asset Disposition, the Borrower shall prepay
the Loans (and such prepayment shall be applied as set forth in Section 2.5 (e))
and, after all Loans have been prepaid, make a Cash Collateral Deposit, in an
amount equal to 100% of such Net Proceeds. On or prior to the date of any Asset
Disposition, the Borrower agrees to provide the Agent with calculations used by
the Borrower in determining the amount of any such prepayment (or in determining
that a prepayment is not required) under this Section 2.5(a).
(b) If the Borrower or any of its Subsidiaries receives insurance
proceeds or condemnation proceeds with respect to any of their Properties which
are not fully applied (or contractually committed pursuant to contract(s)
approved by the Agent in its reasonable discretion) toward the repair or
replacement of such damaged or condemned Property within 180 days of the receipt
thereof, the Borrower shall, on such 180th day prepay the Loans and, after all
Loans have been prepaid, make a Cash Collateral Deposit, in an amount equal to
the amount of such proceeds not so applied (and such prepayment shall be applied
as set forth in Section 2.5(e); PROVIDED THAT no prepayment shall be required to
the extent the aggregate amount of insurance proceeds and condemnation proceeds
received since the Restatement Date is less than or equal to $1,000,000.
(c) In the event that the Borrower or any of its Subsidiaries makes an
Equity Offering, the Borrower shall immediately prepay the Loans and, after all
Loans have been prepaid, make a Cash Collateral Deposit, in an amount equal to
the Net Proceeds of such Equity Offering (and such prepayment shall be applied
as set forth in Section 2.5(e)). No such prepayment shall limit or restrict the
rights and remedies of the Lenders under the Loan Documents upon the occurrence
and during the continuance of a Default.
(d) If at any time the aggregate principal amount of all Loans and
Letters of Credit outstanding exceeds the Aggregate Commitment or the Borrowing
Base, the Borrower shall immediately, without notice or request by the Agent,
prepay the Loans (together with accrued interest to the date of prepayment on
the principal amount prepaid) in an aggregate amount equal to such excess.
(e) (i) Each prepayment of the Loans pursuant to this
Section 2.5 shall be applied to the outstanding amounts of the Base Rate Loans
and thereafter the LIBOR loans, as directed by the Agent. Each prepayment shall
be accompanied by payment in full of all accrued interest and, if applicable,
accrued commitment fees thereon to and including the date of such prepayment,
together with any additional amounts owing pursuant to Section 2.8(c).
(ii) The Borrower agrees to give the Agent at least five
Business Days' irrevocable written notice of any prepayment under this Section
2.5.
(iii) If, at any time, the Revolving Loans are repaid in
full, additional prepayments hereunder shall be applied to make a Cash
Collateral Deposit.
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2.6 CONVERSION AND CONTINUATION OPTIONS.
(a) The Borrower may elect from time to time to convert LIBOR Loans to
Base Rate Loans, by the Borrower giving the Agent at least two Business Days'
prior irrevocable written notice of such election pursuant to a Continuation
Notice. The Borrower may elect from time to time to convert Base Rate Loans to
LIBOR Loans by the Borrower giving the Agent at least three Eurodollar Business
Days' prior irrevocable written notice of such election pursuant to a
Continuation Notice. Any such notice of conversion to LIBOR Loans shall specify
the length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Agent shall promptly notify each Lender thereof.
All or any part of outstanding LIBOR Loans and Base Rate Loans may be converted
as provided herein, provided that (i) any such conversion may only be made if,
after giving effect thereto, Section 2.7 shall not have been contravened, (ii)
no Base Rate Loan may be converted into a LIBOR Loan after the date that is one
month prior to the Loan Commitment Expiration Date and (iii) the Borrower shall
not have the right to elect to continue at the end of the applicable Interest
Period, or to convert to, a LIBOR Loan if a Default shall have occurred and be
continuing.
(b) Any LIBOR Loan may be continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving notice
to the Agent, in accordance with the applicable provisions of the term "Interest
Period" set forth in Section 1.1, of the length of the next Interest Period to
be applicable to such LIBOR Loan, PROVIDED THAT no LIBOR Loan may be continued
as such (i) if, after giving effect thereto, Section 2.7 would be contravened,
or (ii) if a Default shall have occurred and be continuing and PROVIDED,
FURTHER, that if the Borrower shall fail to give any required notice as
described above in this Section or if such continuation is not permitted
pursuant to the preceding proviso, such Loans shall be automatically converted
to Base Rate Loans on the last day of such then-expiring Interest Period.
2.7 MINIMUM AMOUNTS OF TRANCHES. All borrowings, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of the Loans
comprising each Tranche (except Loans made pursuant to Section 2.3(c)) shall be
equal to (a) $250,000 or a whole multiple of $100,000 in excess thereof with
respect to Base Rate Loans, and (b) $500,000 or a whole multiple of $100,000 in
excess thereof with respect to LIBOR Loans; PROVIDED THAT, in any case, there
shall not be more than 8 Tranches.
2.8 INTEREST RATES AND PAYMENT DATES.
(a) Each LIBOR Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the LIBOR
Adjusted Rate plus the Applicable LIBOR Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Base Rate Margin.
(c) If any Default shall have occurred and be continuing, all amounts
outstanding shall bear interest at a rate per annum which is the rate described
in paragraphs (a) and (b) of this
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Section plus 2% from the date of the occurrence of such Default until such
Default is no longer continuing (after as well as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
PROVIDED THAT interest accruing pursuant to paragraph (c) of this Section shall
be payable on demand.
2.9 COMPUTATION OF INTEREST AND FEES.
(a) Interest on Base Rate Loans shall be calculated on the basis of a
365- (or 366-, as the case may be), day year for the actual days elapsed and
interest on LIBOR Loans and all other Obligations of the Borrower shall be
calculated on the basis of a 360-day year for the actual days elapsed. The Agent
shall as soon as practicable notify the Borrower and the Lenders of each
determination of a LIBOR Adjusted Rate. Any change in the interest rate on a
Loan resulting from a change in the Reference Rate or the LIBOR Reserve
Requirements shall become effective as of the opening of business on the day on
which such change in the Reference Rate is announced or such change in the LIBOR
Reserve Requirements becomes effective, as the case may be. The Agent shall as
soon as practicable notify the Borrower and the Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error.
2.10 INABILITY TO DETERMINE INTEREST RATE. In the event that prior to
the first day of any Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower absent manifest error) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBOR Adjusted Rate for such Interest Period, or
(b) the Agent shall have received notice from the Majority Lenders
acting in good faith that the LIBOR Adjusted Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or maintaining
their affected Loans during such Interest Period, the Agent shall give telecopy
or telephonic notice thereof to the Borrower and the Lenders as soon as
practicable thereafter. If such notice is given (x) any LIBOR Loans requested to
be made on the first day of such Interest Period shall accrue interest at the
Reference Rate, (y) Loans that were to have been converted on the first day of
such Interest Period to LIBOR Loans shall be continued as Base Rate Loans and
(z) any outstanding LIBOR Loans shall be converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the
Agent, no further LIBOR Loans shall be made or continued as such, nor shall the
Borrower have the right to convert Base Rate Loans to LIBOR Loans.
2.11 PRO RATA TREATMENT AND PAYMENTS. Each payment (including each
prepayment) by the Borrower on account of principal of and interest on the Loans
shall be made pro rata according to the respective outstanding principal and
interest amounts of such Loans then held by the Lenders. All payments (including
prepayments) to be made by the Borrower hereunder
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and under the Notes, whether on account of principal, interest, fees or
otherwise, shall be made without set off or counterclaim and shall be made prior
to 12:00 Noon, Los Angeles time, on the due date thereof to the Agent, for the
account of the applicable Lenders, at the Agent's office specified in Section
9.2, in Dollars and in immediately available funds. The Agent shall distribute
such payments to the applicable Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the LIBOR Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. If any payment on a LIBOR Loan becomes due and payable on
a day other than a Eurodollar Business Day, the maturity thereof shall be
extended to the next succeeding Eurodollar Business Day (and interest shall
continue to accrue thereon at the applicable rate) unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Eurodollar
Business Day.
2.12 ILLEGALITY. Notwithstanding any other provision herein, if any
change after the Restatement Date in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender or
Applicable Lending Office to make or maintain LIBOR Loans as contemplated by
this Agreement, (a) the commitment of such Lender hereunder to make LIBOR Loans,
continue LIBOR Loans as such and convert Base Rate Loans to LIBOR Loans shall
forthwith be suspended during such period of illegality and (b) the Loans of
such Lender or Applicable Lending Office then outstanding as LIBOR Loans, if
any, shall be converted automatically to Base Rate Loans on the respective last
days of the then current Interest Periods with respect to such Loans or within
such earlier period as required by law. If any such conversion of a LIBOR Loan
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, the Borrower shall pay to such Lender such amounts, if
any, as may be required pursuant to Section 2.15. To the extent that a Lender's
LIBOR Loans have been converted to Base Rate Loans pursuant to Section 2.6, all
payments and prepayments of principal that otherwise would be applied to such
Lender's LIBOR Loans shall be applied instead to its Base Rate Loans.
2.13 INCREASED COSTS.
(a) In the event that any change after the Restatement Date in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law but, if not having the force of law, generally applicable to and complied
with by banks and financial institutions of the same general type as such Lender
in the relevant jurisdiction) from any central bank or other Governmental
Authority made subsequent to the date hereof:
(i) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirements against assets held by,
letters of credit or guarantees issued by, deposits or other liabilities in or
for the account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender or Applicable Lending
Office which is not otherwise included in the determination of the LIBOR
Adjusted Rate hereunder; or
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(ii) shall impose on such Lender or Applicable Lending
Office any other condition;
and the result of any of the foregoing is to increase the cost to the Agent of
issuing or maintaining any Letter of Credit by an amount which the Agent deems
to be material, or to such Lender or Applicable Lending Office, by an amount
which such Lender deems to be material, of making, converting into, continuing
or maintaining LIBOR Loans, or purchasing or maintaining any participation in a
Letter of Credit, or to reduce any amount receivable hereunder in respect
thereof then, in any such case, the Borrower shall immediately pay to the Agent,
for its own account or on behalf of such Lender or Applicable Lending Office, as
applicable, upon the demand of the Agent for itself or at the request of such
Lender, as applicable, any additional amounts necessary to compensate such
Lender or the Agent, as applicable, for such increased cost or reduced amount
receivable. If the Agent, any Lender or any Applicable Lending Office becomes
entitled to claim any additional amounts pursuant to this Section, it shall
promptly notify the Borrower, through the Agent, of the event by reason of which
it has become so entitled. A certificate as to any additional amounts payable
pursuant to this Section submitted by the Agent or such Lender or Applicable
Lending Office, through the Agent, to the Borrower shall be conclusive evidence
of the accuracy of the information so recorded, absent manifest error. This
covenant shall survive the termination of this Agreement, expiration of the
Letters of Credit and the payment of the Notes and all other amounts payable
hereunder.
(b) If, after the date of this Agreement, the introduction of or any
change in any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or the National Association of Insurance
Commissioners or comparable agency charged with the interpretation or
administration thereof, affects the amount of capital required or expected to be
maintained by any Lender or any corporation controlling any Lender, and such
Lender (taking into consideration such Lender's or such corporation's policies
with respect to capital adequacy) determines that the amount of capital
maintained by such Lender or such corporation which is attributable to or based
upon the Loans, the Letters of Credit, the Commitments or this Agreement must be
increased as a consequence of such introduction or change by an amount deemed by
such Lender to be material, then, upon demand of the Agent at the request of
such Lender, the Borrower shall immediately pay to the Agent on behalf of such
Lender, additional amounts sufficient to compensate such Lender or such
corporation for the increased costs to such Lender or corporation of such
increased capital. Any such demand shall be accompanied by a certificate of such
Lender setting forth in reasonable detail the computation of any such increased
costs, which certificate shall be conclusive, absent manifest error. This
covenant shall survive the termination of this Agreement, expiration of the
Letters of Credit and the payment of the Notes and all other amounts payable
hereunder.
2.14 TAXES.
(a) All payments made by the Borrower in respect of the Obligations
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority or any
political subdivision or taxing authority thereof or therein, other
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than Excluded Taxes (all such non-Excluded Taxes being hereinafter called
"TAXES"). If any Taxes are required to be withheld from any amounts payable to
the Agent or any Lender in respect of the Obligations, the amounts so payable to
the Agent or such Lender shall be increased to the extent necessary to yield to
the Agent or such Lender (after payment of all Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the Notes. The Agent or a Lender, as the case may be, shall
deliver to the Borrower a certificate in good faith setting forth the amount of
such Taxes, the calculation of such Taxes and an explanation of the requirement
therefor, all in reasonable detail and such certificate shall be conclusive,
absent manifest error. Whenever any Taxes are payable by the Borrower, as
promptly as possible thereafter, the Borrower shall send to the Agent, for its
own account or for the account of such Lender, as the case may be, a copy of an
original official receipt received by the Borrower showing payment thereof or
such other evidence of payment reasonably satisfactory to the Agent. If the
Borrower fails to pay any Taxes when due to the appropriate taxing authority or
fails to remit to the Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Agent and the Lenders for any
incremental taxes, interest or penalties (and related reasonable fees and
expenses of counsel) that may become payable by the Agent or any Lender as a
result of any such failure. The agreements in this Section shall survive the
termination of this Agreement and the payment of the Notes and all other amounts
payable hereunder.
(b) Each Lender that is not organized under the laws of the United
States of America or a state thereof agrees that it will deliver to the Borrower
and the Agent (i) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form, as the case may be, and
(ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form.
Each such Lender also agrees to deliver to the Borrower and the Agent two
further copies of the said Form 1001 or 4224 and Form W-8 or W-9, or successor
applicable forms or other manner or certification, as the case may be, on or
before the date that any such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Borrower and the Agent, and such extensions or renewals
thereof as may reasonably be requested by the Borrower or the Agent, unless in
any such case an event beyond the control of such Lender (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender so advised the
Borrower and the Agent. Each such Lender shall certify (i) in the case of a Form
1001 or 4224, that it is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes and
(ii) in the case of a Form W-8 or W-9, that it is entitled to an exemption from
United States backup withholding tax.
2.15 INDEMNITY. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from and to pay each Lender within 5 Business Days of
such Lender's demand the amount of any liability, loss or expense arising from
the reemployment of funds obtained by it or from fees payable to terminate the
deposits from which such funds were obtained (including reasonable fees and
expenses of counsel) which such Lender may sustain or incur as a consequence of
(a) default by the Borrower in payment when due of the principal amount of or
interest on any LIBOR Loan, (b) default by the Borrower in making a borrowing
of, conversion into or continuation of LIBOR Loans after the Borrower has given
a notice requesting the same
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in accordance with the provisions of this Agreement, (c) default by the Borrower
in making any prepayment after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (d) the making by the
Borrower of a prepayment or conversion of LIBOR Loans on a day which is not the
last day of an Interest Period with respect thereto. A Lender's certificate as
to such liability, loss or expense shall be deemed conclusive, absent manifest
error. This covenant shall survive the termination of this Agreement, expiration
of the Letters of Credit and the payment of the Notes and all other amounts
payable hereunder.
2.16 MITIGATION OF COSTS. If any Lender, by changing its Applicable
Lending Office or taking any other reasonable action, so long as making such
change or taking such other action is not disadvantageous to it in any
financial, regulatory or other respect, can mitigate any adverse effect on the
Borrower under Section 2.10, 2.12, 2.13, 2.14, or 2.15, such Lender shall take
such action.
2.17 COMMITMENT FEE. The Borrower shall pay to the Agent on behalf of
the Lenders from the Restatement Date to the Loan Commitment Expiration Date, a
commitment fee equal to the Commitment Fee Amount on the average daily amount by
which the Aggregate Commitment exceeds the aggregate principal amount of all
Loans outstanding. Such commitment fee shall be payable quarterly in arrears on
the last Business Day of each March, June, September and December, commencing on
December 31, 2000 and ending on the Loan Commitment Expiration Date. The
commitment fee shall be calculated on the basis of actual days elapsed over a
year of 360 days.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Loans and participate in the Letters of Credit, and to induce the Agent to issue
the Letters of Credit, the Borrower hereby represents and warrants to the Agent
and each Lender that:
3.1 ORGANIZATION AND GOOD STANDING. The Borrower and each Subsidiary
(a) is duly incorporated, validly existing and in good standing under the laws
of its jurisdiction of incorporation as indicated on SCHEDULE 3.1, (b) has all
requisite corporate power and authority to own its properties and to conduct its
business as now conducted and as currently proposed to be conducted and (c) is
duly qualified to conduct business as a foreign corporation and is currently in
good standing in each state and jurisdiction in which it conducts business
except, in each case referred to in clause (c), to the extent that the failure
to do so could not reasonably be expected to have a Material Adverse Effect.
Each state and jurisdiction in which the Borrower or any Subsidiary is or should
be qualified to conduct business is listed on SCHEDULE 3.1.
3.2 POWER AND AUTHORITY. The Borrower and each Subsidiary has all
requisite power and authority under applicable law and under its Organic
Documents to (i) in the case of the Borrower, borrow hereunder and (ii) execute,
deliver and perform its respective obligations under the Loan Documents to which
it is a party. All actions, waivers and consents (corporate, regulatory and
otherwise) necessary or appropriate for the Borrower and each Subsidiary to
execute, deliver and perform the Loan Documents to which it is a party have been
taken and/or received.
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3.3 VALIDITY AND LEGAL EFFECT. This Agreement constitutes, and the
other Loan Documents to which the Borrower or any Subsidiary is a party
constitute (or will constitute when executed and delivered), the legal, valid
and binding obligations of the Borrower or such Subsidiary, as applicable,
enforceable against it in accordance with the terms thereof, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of
creditors' rights and (b) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
3.4 NO VIOLATION OF LAWS OR AGREEMENTS. The execution, delivery and
performance of the Loan Documents (a) will not violate or contravene any
Requirement of Law, (b) will not result in any material breach or violation of,
or constitute a material default under, any agreement or instrument by which the
Borrower or any Subsidiary, or any of its property, may be bound, and (c) will
not result in or require the creation of any Lien (other than those permitted by
Section 6.3) upon or with respect to any property of the Borrower or any
Subsidiary, whether such property is now owned or hereafter acquired.
3.5 TITLE TO ASSETS; EXISTING ENCUMBRANCES; LEGAL NAMES. The Borrower
and each Subsidiary has good and marketable title to all of its real and
personal properties and assets, free and clear of any Liens (other than those
permitted by Section 6.3). Neither the Borrower nor any Subsidiary has used (or
permitted the filing of any financing statement under) any legal or operating
name at any time during the twelve consecutive calendar months immediately
preceding the execution of this Agreement, except as identified on SCHEDULE 3.5.
3.6 CAPITAL STRUCTURE; EQUITY OWNERSHIP. The authorized capital stock
of the Borrower consists of an aggregate of 50,000,000 shares of common stock,
without par value, 9,201,995 shares of which are issued and outstanding, and
5,000,000 shares of preferred stock, without par value, no shares of which are
issued and outstanding. All of the issued and outstanding shares of common stock
of the Borrower are duly and validly issued and outstanding, and each of such
shares is fully paid and nonassessable. Except as set forth on SCHEDULE 3.6,
there are no outstanding Equity Rights with respect to the Borrower or any
Subsidiary and there are no outstanding obligations of the Borrower or any of
its Subsidiaries to repurchase, redeem, or otherwise acquire any shares of
capital stock of the Borrower, nor are there any outstanding obligations of the
Borrower or any of its Subsidiaries to make payments to any Person, such as
"phantom stock" payments, where the amount thereof is calculated with reference
to the fair market value or equity value of Borrower or any of its Subsidiaries.
3.7 SUBSIDIARIES AND AFFILIATES. SCHEDULE 3.7 accurately and completely
discloses (i) each Subsidiary and Affiliate of the Borrower (other than its
officers and directors), (ii) each Person holding ownership interests in such
Subsidiary and (iii) the nature of the ownership interests held by each such
Person and the percentage of ownership of such Subsidiary represented by such
ownership interests.
3.8 MATERIAL CONTRACTS. Neither the Borrower nor any Subsidiary has
committed any unwaived breach or default under any Material Contract, and the
Borrower has no knowledge or reason to believe that any other party to any
Material Contract has committed any unwaived breach or default thereof. Each of
the Material Contracts is a legal, valid and binding obligation
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of the Borrower or the Subsidiaries party thereto, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability. The
Borrower has made available to the Lenders and the Agent a complete and correct
copy of each Material Contract (including in each case all exhibits, schedules
and disclosure letters referred to therein or delivered pursuant thereto, if
any) and all amendments thereto and other side letters or agreements affecting
the terms thereof. Neither the Borrower nor any of its Subsidiaries is party to
any current agreements or letters of intent providing for the acquisition or
disposition of any assets with a fair market value of $1,000,000 or more.
3.9 TAXES AND ASSESSMENTS. The Borrower and each Subsidiary has timely
filed all required tax returns and reports (federal, state and local) or has
properly filed for extensions of the time for the filing thereof. The Borrower
has no knowledge of any deficiency, penalty or additional assessment due or
appropriate in connection with any such taxes. All taxes (federal, state and
local) imposed upon the Borrower or any Subsidiary or any of its properties,
operations or income have been paid and discharged prior to the date when any
interest or penalty would accrue for the nonpayment thereof, except for those
taxes being contested in good faith by appropriate proceedings diligently
prosecuted and with adequate reserves reflected on the financial statements in
accordance with GAAP. There are no taxes imposed on the Borrower or its
Subsidiaries by any political subdivision or taxing authority due or payable
either on or by virtue of the execution and delivery by the Borrower, the
Subsidiaries, the Agent, or the Lenders of this Agreement or any other Loan
Document to which the Borrower or the Subsidiaries are party, or on any payment
to be made by the Borrower pursuant hereto or thereto.
3.10 LITIGATION AND LEGAL PROCEEDINGS. Except as disclosed on SCHEDULE
3.10, there is no litigation, claim, investigation, administrative proceeding,
labor controversy or similar action that is pending or, to the knowledge of the
Borrower, threatened (i) with respect to any Loan Document or the transactions
contemplated thereby, or (ii) against the Borrower, any Subsidiary or any
Property which, if determined adversely to the Borrower or any Subsidiary, would
reasonably be expected to have a Material Adverse Effect.
3.11 ACCURACY OF FINANCIAL INFORMATION.
(a) All information previously furnished to the Agent and the Lenders
that was prepared by or on behalf of the Borrower concerning the financial
condition and operations of the Borrower or any Subsidiary, including (i) the
audited consolidated financial statements of the Borrower and its Subsidiaries
for the fiscal year ended December 31, 1999 (including, separately stated,
consolidating statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries), and (ii) the unaudited consolidated financial
statements for the Borrower and its Subsidiaries for the fiscal quarter ended
June 30, 2000, (A) have been prepared in accordance with GAAP consistently
applied, (B) are true, accurate and complete in all material respects, (C)
fairly present the financial condition of the organizations covered thereby as
of the dates and for the periods covered thereby and (D) disclose all material
liabilities (contingent and otherwise) of the Borrower and the Subsidiaries.
(b) Since December 31, 1997 there has been no event or condition
resulting in a Material Adverse Effect.
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3.12 ACCURACY OF OTHER INFORMATION. All information contained in any
application, schedule, report, certificate, or any other document given to the
Agent or any Lender by the Borrower or any agent of the Borrower in connection
with the Loan Documents is in all material respects true, accurate and complete,
and no such Person has omitted to state therein (or failed to include in any
such document) any material fact or any fact necessary to make such information
not misleading. All projections given to the Agent, or any Lender by the
Borrower or any other Person have been prepared with a reasonable basis and in
good faith making use of such information as was available at the date such
projection was made. The projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed by the Borrower to be reasonable at the time made and as of the
Restatement Date, it being recognized that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.
3.13 COMPLIANCE WITH LAWS GENERALLY. The Borrower and each Subsidiary
is in compliance in all material respects with all Requirements of Law
applicable to it, its operations and its properties.
3.14 ERISA COMPLIANCE.
(a) The Borrower and each Subsidiary is in compliance in all material
respects with all applicable provisions of ERISA, and all rules, regulations and
orders implementing ERISA.
(b) Neither the Borrower nor any Subsidiary, or any ERISA Affiliate
thereof, maintains or contributes to (or has maintained or contributed to) any
Multiemployer Plan under which the Borrower, any Subsidiary or any ERISA
Affiliate thereof could have any withdrawal liability.
(c) Neither the Borrower nor any Subsidiary, or any ERISA Affiliate
thereof, sponsors or maintains any defined benefit pension plan under which
there is an accumulated funding deficiency within the meaning of Section 412 of
the Code, whether or not waived.
(d) The liability for accrued benefits under each defined benefit
pension plan that will be sponsored or maintained by the Borrower, any
Subsidiary or any ERISA Affiliate thereof (determined on the basis of the
actuarial assumptions utilized by the PBGC) does not exceed the aggregate fair
market value of the assets under each such defined benefit pension plan.
(e) The aggregate liability of the Borrower, each Subsidiary and each
ERISA Affiliate thereof arising out of or relating to a failure of any employee
benefit plan within the meaning of Section 3(2) of ERISA to comply with
provisions of ERISA or the Code will not have a Material Adverse Effect.
(f) There does not exist any unfunded liability (determined on the
basis of actuarial assumptions utilized by the actuary for the plan in preparing
the most recent annual report) of the Borrower, any Subsidiary or any ERISA
Affiliate thereof under any plan, program or arrangement providing
post-retirement, life or health benefits.
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(g) No Reportable Event and no Prohibited Transaction (as defined in
ERISA) has occurred or is occurring with respect to any plan with which the
Borrower or any Subsidiary is associated.
3.15 ENVIRONMENTAL COMPLIANCE.
(a) The Borrower and each Subsidiary has received all permits and filed
all notifications necessary under and is otherwise in compliance in all material
respects with all federal, state and local laws, rules and regulations governing
the control, removal, storage, transportation, spill, release or discharge of
Hazardous Materials, including, without limitation, as provided in the
provisions of and the regulations under (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendment and Reauthorization Act of 1986, (ii) the Solid Waste Disposal Act,
(iii) the Clean Water Act and the Clean Air Act, (iv) the Hazardous Materials
Transportation Act, (v) the Resource Conservation and Recovery Act of 1976 and
(vi) the Federal Water Pollution Control Act Amendments of 1972 (all of the
foregoing enumerated and nonenumerated statutes, including without limitation
any applicable state or local statutes, all as amended, collectively, the
"ENVIRONMENTAL CONTROL STATUTES").
(b) Neither the Borrower nor any Subsidiary has given any written or
oral notice to the Environmental Protection Agency ("EPA") or any state or
local agency with regard to any actual or imminently threatened removal,
storage, transportation, spill, release or discharge of Hazardous Wastes
either (i) on properties owned or leased by the Borrower or such Subsidiary
or (ii) otherwise in connection with the conduct of its business and
operations.
(c) Neither the Borrower nor any Subsidiary has received notice that it
is potentially responsible for costs of clean-up of any actual or imminently
threatened spill, release or discharge of Hazardous Wastes pursuant to any
Environmental Control Statute.
(d) No judicial proceedings or governmental or administrative action is
pending, or, to the knowledge of the Borrower, threatened, under any
Environmental Control Statute to which the Borrower or any of its Subsidiaries
is named as a party with respect to the Properties or the business conducted at
the Properties, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Control Statute with
respect to the Properties or such business.
3.16 FEDERAL REGULATIONS. No Letter of Credit and no part of the
proceeds of any Loans are intended to be or will be used, directly or indirectly
for any purpose which violates the provisions of the Regulations of the Board of
Governors of the Federal Reserve System. If requested by any Lender or the
Agent, and in any event upon consummation of any acquisition involving the
purchase of stock by the Borrower or any Subsidiary, the Borrower will furnish
to the Agent and each Lender a statement to the foregoing effect in conformity
with the requirements of Form U-1 referred to in Regulation U.
3.17 FEES AND COMMISSIONS. Except as disclosed on SCHEDULE 3.17, or the
letter referred to in Section 4.1(d), neither the Borrower nor any Subsidiary
owes or will owe any fees
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or commissions of any kind in connection with this Agreement or the transactions
contemplated hereby or thereby, and the Borrower does not know of any claim (or
any basis for any claim) for any fees or commissions in connection with this
Agreement or the transactions contemplated hereby or thereby.
3.18 SOLVENCY. Immediately prior to and upon the execution of this
Agreement, the funding of the Loans and the issuance of any Letters of Credit to
be funded or issued on the Restatement Date, the Borrower and each Guarantor
was, is and will be Solvent.
3.19 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT.
(a) Neither the Borrower nor any Subsidiary is an "investment company",
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(b) Neither the Borrower nor any Subsidiary is a "holding company," or
an "affiliate" of a "holding company" or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
3.20 NATURE OF BUSINESS. Neither the Borrower nor any of its
Subsidiaries is engaged in any material business other than as described in
Section 6.11.
3.21 USE OF PROCEEDS. All proceeds of the Loans shall be used by
Borrower for the purposes of (i) repaying all unpaid principal and interest
outstanding under the Existing Agreement, (ii) funding working capital and
capital expenditures, (iii) funding general corporate purposes, (iv) funding
Permitted Repurchases, and (v) providing additional funds for equipment
purchases and acquisitions.
3.22 EVENT OF DEFAULT. No Event of Default exists.
3.23 RANKING OF LOANS. This Agreement and the other Loan Documents to
which the Borrower is party, when executed, and the Loans, when borrowed, are
and will be the direct and general obligations of the Borrower. The Borrower's
obligations hereunder and thereunder rank and will rank at least PARI PASSU in
priority of payment to all other Indebtedness.
3.24 MATERIAL CONTRACTS.
The Borrower and each Subsidiary is not party to any material contract.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS TO RESTATEMENT DATE. The agreement of each Lender to
make the Loans requested to be made by it on the Restatement Date and
participate in any Letters of Credit issued on the Restatement Date and the
agreement of the Agent to issue any Letters of Credit requested to be issued on
the Restatement Date are subject to the satisfaction, immediately prior to or
concurrently with the making of such Loans and/or the issuance of and
participation in such Letters of Credit on the Restatement Date, of the
following conditions precedent:
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(a) CREDIT AGREEMENT. The Agent shall have received this Agreement,
executed and delivered by an officer of the Borrower as of the Restatement Date.
(b) OTHER LOAN DOCUMENTS. The Agent shall have received the Notes, the
Guarantees, the Guarantor Collateral Documents, the Collateral Documents, the
ADR Agreement, all UCC-1 Financing Statements and amendments thereto and all
other agreements or instruments required to create or perfect a security
interest in the Collateral and the Guarantor Collateral executed in connection
herewith, in each case executed and delivered by an officer of the relevant
Obligor.
(c) CORPORATE DOCUMENTS. Certified copies of the charter and by-laws of
each Obligor and of all corporate authority for each Obligor (including, without
limitation, board of director resolutions and evidence of the incumbency,
including specimen signatures, of officers) with respect to the execution,
delivery and performance of such of the Loan Documents to which such Obligor is
intended to be a party and each other document to be delivered by such Obligor
from time to time in connection herewith and the extensions of credit hereunder.
(d) FEES AND COSTS. The Agent shall have received payment of (i) the
fees set forth in the fee side letter executed by the Borrower and the Agent in
connection herewith and (ii) such other fees, costs and expenses, including
reasonable legal fees, as are requested by the Agent to be paid on the
Restatement Date by the Borrower in connection with this Agreement.
(e) LIEN SEARCHES. The Agent shall have received such lien searches as
it shall request from all relevant jurisdictions set forth on SCHEDULE 4.1(e),
listing all effective financing statements which name the Borrower or any
Guarantor (or any predecessor thereto), as debtor, none of which, except for
Liens permitted by Section 6.3, shall cover any of the Collateral.
(f) REPAYMENT OF CERTAIN INDEBTEDNESS; RELEASE OF LIENS. The Agent
shall have received evidence satisfactory to it that all Indebtedness listed on
SCHEDULE 4.1(f) has been repaid in full.
(g) FINANCIAL STATEMENTS: The Agent shall have received the Borrower's
(i) operating and financial statements for the 6 month period ending June 30,
2000, (ii) operating and balance sheet projections for the four year period
following the Restatement Date, and (iii) a budget of the Borrower's Capital
Expenditure budget covering a four year period following the Restatement Date,
in each case in form and substance satisfactory to the Agent.
(h) FIXED ASSETS: The Agent shall have received from the Borrower on
SCHEDULE 4.1(h) a schedule of all fixed assets of the Borrower, current as of
the Restatement Date.
(i) CORPORATE ORGANIZATION AND CAPITAL STRUCTURE: The Agent shall have
received information concerning the corporate organization and capital structure
of the Borrower and each Subsidiary satisfactory to the Agent.
(j) GOOD STANDING CERTIFICATES. Except as provided by Section 4.3(c),
with respect to each Obligor which is a legal entity, the Agent shall have
received a certificate, dated a recent date, of the Secretary of State of the
state of formation of such Obligor and each other jurisdiction where such
Obligor is required to be qualified to do business under such
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<PAGE>
jurisdiction's law, certifying as to the existence and good standing of, and the
payment of taxes by, each such Obligor in such state.
(k) OFFICER'S CERTIFICATE. A certificate of a senior officer of the
Borrower substantially in the form of Exhibit G, dated the Restatement Date, to
the effect set forth in the first sentence of Section 4.2.
(l) INSURANCE POLICIES. The Agent shall have received evidence in form
and substance reasonably satisfactory to the Agent that the insurance required
by Section 5.6 is in full force and effect.
(m) NECESSARY GOVERNMENTAL AUTHORIZATIONS AND CONSENTS; EXPIRATION OF
WAITING PERIODS, ETC. The Borrower shall have obtained all governmental
authorizations and all consents of other Persons that are necessary or advisable
in connection with the transactions contemplated by the Loan Documents and each
of the foregoing shall be in full force and effect, in each case other than
those the failure to obtain or maintain which, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
No action, request for stay, petition for review or rehearing, reconsideration,
or appeal with respect to any of the foregoing shall be pending, and the time
for any applicable agency to take action to set aside its consent on its own
motion shall have expired.
(n) ADDITIONAL PROCEEDINGS. The Agent shall have received such other
approvals, opinions and documents as the Agent may reasonably request and all
legal matters incident to the making of such Loans and issuance of such Letters
of Credit shall be reasonably satisfactory to the Agent.
(o) BORROWING BASE. The Agent shall have received a Borrowing Base
Certificate with respect to any borrowings of Loans to be made on the
Restatement Date.
(p) DUE DILIGENCE. The Agent shall have completed a due diligence
review of the Borrower and each Subsidiary, which review shall include, but
shall not be limited to, a field examination of the Borrower's Accounts
Receivable, Inventory, Operating Machinery and Equipment, payables, operational
controls and accounting and other systems.
(q) LEGAL OPINIONS. The Agent shall have received, with a counterpart
for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Katten Muchin & Zavis,
counsel to the Borrower and the Guarantors, in form and substance satisfactory
to the Agent; and
(ii) such other legal opinions as the Agent may reasonably
request.
4.2 CONDITIONS TO EACH LOAN OR LETTER OF CREDIT. The agreement of each
Lender to make each Loan and to participate in each Letter of Credit, and the
agreement of the Agent to issue each Letter of Credit, requested to be made,
issued or participated in by it is subject to the satisfaction, immediately
prior to or concurrently with the making of such Loan or the issuance or
participation in such Letter of Credit, of the following conditions precedent:
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(a) REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The following
statements shall be true and the Borrower's acceptance of the proceeds of such
Loan or its delivery of an executed Letter of Credit Request shall be deemed to
be a representation and warranty of the Borrower on the date of such Loan or as
of the date of issuance of such Letter of Credit, as applicable, that:
(i) The representations and warranties contained in this
Agreement and in each other Loan Document and certificate or other writing
delivered to the Lenders prior to, on or after the Restatement Date pursuant
hereto and on or prior to the date for such Loan or the issuance of such Letter
of Credit are correct on and as of such date in all material respects as though
made on and as of such date except to the extent that such representations and
warranties expressly relate to an earlier date; and
(ii) No Default has occurred and is continuing or would
result from the making of the Loan to be made on such date or the issuance of
such Letter of Credit as of such date.
(b) LEGALITY. The making of such Loan or the issuance of such Letter of
Credit, as applicable, shall not contravene any law, rule or regulation
applicable to any Lender or any Obligor.
(c) BORROWING NOTICE/LETTER OF CREDIT REQUEST. The Agent shall have
received a borrowing notice or Letter of Credit Request, as applicable, pursuant
to the provisions of this Agreement from the Borrower.
4.3 CONDITIONS SUBSEQUENT. Not later than 30 days after the Restatement
Date:
(a) LANDLORD CONSENTS. The Agent shall have received a Landlord Consent
with respect to all real property leased to the Borrower or any Guarantor and
listed on SCHEDULE 4.3(a), including, without limitation, with respect to each
real property lease assigned to the Borrower pursuant to the Acquisition
Agreement, and all such Landlord Consents shall have been submitted for
recording in the relevant recording offices in each relevant jurisdiction.
(b) CERTIFIED UCC SEARCHES. The Agent shall have received certified
copies of requests for information from all relevant jurisdictions, listing all
effective financing statements which name the Borrower or any Guarantor (or any
predecessor thereto), as debtor, together with copies of such financing
statements, none of which, except for Liens permitted by Section 6.3, shall
cover any of the Collateral or the Guarantor Collateral.
(c) GOOD STANDING CERTIFICATES. The Agent shall have received a
certificate, dated a recent date, of (i) the Secretary of State for the State of
New York, (ii) the State Department of Taxation and Finance for the State of New
York, and (iii) the Secretary of State of the State of Illinois certifying as to
the existence and good standing of, and the payment of taxes by, the Borrower in
each such state.
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SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that from and after the Restatement Date, so
long as any Commitment remains in effect, any Note remains outstanding and
unpaid or any other amount is owing to any Lender or the Agent hereunder, or any
Letter of Credit remains outstanding:
5.1 FINANCIAL STATEMENTS.
(a) As soon as available and in any event within 45 days after the end
of each quarterly fiscal period of each fiscal year of the Borrower, the
Borrower shall deliver to the Agent, with sufficient copies for each Lender,
consolidated (and consolidating, as applicable) statements of income, retained
earnings and cash flows of the Borrower and its Subsidiaries for such period,
and the related consolidated balance sheets of the Borrower and its Subsidiaries
as at the end of such period, setting forth in each case in comparative form the
corresponding consolidated figures for the corresponding periods in the
preceding fiscal year (except that, in the case of the balance sheets, such
comparison shall be to the last day of the prior fiscal year), accompanied by a
certificate of a senior financial officer of the Borrower, which certificate
shall state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of the Borrower, the
Borrower and its Subsidiaries, in each case in accordance with GAAP consistently
applied, as at the end of, and for, such period (subject to normal year-end
audit adjustments); and
(b) as soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower, the Borrower shall deliver to the
Agent, with sufficient copies for each Lender, audited consolidated
statements of income, retained earnings and cash flows of the Borrower and
its Subsidiaries for such fiscal year and the related consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal year,
setting forth in comparative form the corresponding consolidated figures for
the preceding fiscal year, and accompanied by an opinion thereon of the
Accountants, which opinion shall state that said consolidated financial
statements fairly present the consolidated financial condition and results of
operations of the Borrower and its Subsidiaries as at the end of, and for,
such fiscal year in accordance with GAAP, and a statement of the Accountants
to the effect that, in making the examination necessary for their opinion,
nothing came to their attention that caused them to believe that the Borrower
was not in compliance with Section 6.1, insofar as such Section relates to
accounting matters.
(c) MONTHLY REPORTS. The Borrower shall deliver to the Agent, with
sufficient copies for each Lender, within 30 days of the end of each month a
report in form reasonably satisfactory to the Agent providing information with
respect to the Borrower's Accounts Receivable agings.
(d) FINANCIAL PROJECTIONS. The Borrower shall deliver to the Agent,
with sufficient copies for each Lender, within 30 days after the beginning of
each fiscal year, projections of its anticipated income, expenses, cash flow,
assets and liabilities for the next fiscal year, in a form reasonably
satisfactory to the Agent and the Lenders.
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(e) FURTHER INFORMATION. The Borrower will promptly furnish to the
Agent such other information (including information pertaining to the Borrower's
financial condition, operations and otherwise) as the Agent may reasonably
request.
5.2 CERTIFICATES; OTHER INFORMATION. The Borrower shall deliver to each
Lender:
(a) within 45 days after the end of each quarterly fiscal period of
each fiscal year of the Borrower, a Covenant Compliance Certificate as of the
end of such quarter;
(b) within five Business Days after the same are filed, copies of all
financial statements and reports which the Borrower or any Subsidiary may make
to, or file with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority;
(c) promptly but, in any event, within five Business Days after receipt
thereof, copies of all financial reports (including, without limitation,
management letters), if any, submitted to the Borrower or any Subsidiary by the
Accountants in connection with any annual or interim audit of the books thereof;
(d) as soon as available and in any event within 30 days after December
31 of each fiscal year, a budget for the next following fiscal year setting
forth anticipated income, expense and capital expenditure items for each quarter
during such fiscal year;
(e) as soon as possible and in any event within five Business Days
after the occurrence of a Default or, in the good faith determination of a
Responsible Officer of the Borrower, a Material Adverse Effect, the written
statement by a Responsible Officer of the Borrower, setting forth the details of
such Default or Material Adverse Effect and the action which the Borrower
proposes to take with respect thereto;
(f) (A) as soon as possible and in any event within 30 days after the
Borrower knows or has reason to know that any Termination Event with respect to
any Plan has occurred, a statement of a Responsible Officer of the Borrower
describing such Termination Event and the action, if any, which the Borrower
proposes to take with respect thereto, (B) promptly and in any event within ten
days after receipt thereof by the Borrower or any ERISA Affiliate of the
Borrower from the PBGC, copies of each notice received by the Borrower or such
ERISA Affiliate of the PBGC's intention to terminate any Plan or to have a
trustee appointed to administer any Plan, (C) promptly and in any event within
30 days after the filing thereof with the Internal Revenue Service, copies of
each Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
with respect to each Single Employer Plan maintained for or covering employees
of the Borrower or any Subsidiary if the present value of the accrued benefits
under the Plan exceeds its assets by an amount in excess of $500,000 and (D)
promptly and in any event within ten days after receipt thereof by the Borrower
or any ERISA Affiliate of the Borrower from a sponsor of a Multiemployer Plan or
from the PBGC, a copy of each notice received by the Borrower or such ERISA
Affiliates concerning the imposition or amount of withdrawal liability under
Section 4202 of ERISA or indicating that such Multiemployer Plan may enter
reorganization status under Section 4241 of ERISA;
(g) promptly after the commencement thereof, but in any event not later
than five Business Days after service of process with respect thereto on, or the
obtaining of knowledge by,
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the Borrower or any Subsidiary, notice of each material action, suit or
proceeding before any Governmental Authority;
(h) within five days following receipt by the Borrower or any
Subsidiary, copies of all notices received by the Borrower or such Subsidiary
from the Internal Revenue Service or other taxing authority relating to any
material dispute regarding deductions, audits or any other material matter; and
(i) promptly, such additional financial and other information as any
Lender, through the Agent, may from time to time reasonably request.
5.3 PAYMENT OF OBLIGATIONS. The Borrower shall, and shall cause each of
its Subsidiaries to, pay, discharge or otherwise satisfy at or before maturity
or before they become delinquent, as the case may be, all its obligations of
whatever nature, except where the failure to so satisfy such obligations would
not have a Material Adverse Effect or except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.
5.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The Borrower
shall, and shall cause each of its Subsidiaries to, (i) continue to engage in
the video duplication business, the post-production business, the audio
sweetening business, the business of distributing national television spot
advertising, trailers and electronic press kits for the motion picture and
television industries, or engage in the business of owning (and renting) limited
amounts of niche programming and media buying, (ii) preserve, renew and keep in
full force and effect its corporate existence, (iii) take all reasonable action
to maintain all rights, registrations, licenses, privileges and franchises
necessary or desirable in the normal conduct of its business, and (iv) comply
with all Contractual Obligations and Requirements of Law except to the extent,
in the case of this clause (iv), that failure to comply therewith would not, in
the aggregate, have a Material Adverse Effect.
5.5 MAINTENANCE OF PROPERTY. The Borrower shall, and shall cause each
of its Subsidiaries to, keep all property useful or necessary in its business in
good working order and condition (ordinary wear and tear excepted).
5.6 INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain insurance with financially sound and reputable
insurance companies, and with respect to Property and risks of a character
usually maintained by corporations engaged in the same or similar business
similarly situated, against loss, damage and liability of the kinds and in the
amounts customarily maintained by such corporations. The Borrower shall
designate the Agent as loss payee or additional insured, as appropriate with
respect to such insurance and cause such insurance to provide for 30 days' prior
written notice to Agent of any modification or cancellation of such insurance.
5.7 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The
Borrower shall, and shall cause each of its Subsidiaries to, keep proper books
of records and account in which full, true and correct entries in conformity
with GAAP and all Requirements of Law shall be
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made of all material dealings and transactions in relation to its business and
activities; and upon reasonable notice and at such reasonable times during usual
business hours, permit representatives of any Lender to visit and inspect any of
its properties and (i) examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition
of the Borrower and its Subsidiaries with officers and employees of the Borrower
and its Subsidiaries and with its Accountants, and (ii) make such further
inspections and examinations, including field audits, as deemed reasonably
necessary by the Agent or any Lender to confirm information provided by the
Borrower in any Borrowing Base Certificate.
5.8 ENVIRONMENTAL LAWS. The Borrower shall, and shall cause each of its
Subsidiaries to:
(a) Comply in all material respects with, and ensure compliance by all
tenants and subtenants, if any, with, all applicable Environmental Control
Statutes and obtain and comply in all material respects with any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Control Statutes;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Control Statutes and promptly comply in all material respects with
all lawful orders and directives of all Governmental Authorities regarding
Environmental Control Statutes except to the extent that the same are being
contested in good faith by appropriate proceedings; and
(c) Defend, indemnify and hold harmless the Agent and the Lenders, and
their respective employees, agents, officers and directors, from and against any
and all claims, demands, penalties, fines, liabilities, settlements, damages,
costs and expenses of whatever kind or nature known or unknown, contingent or
otherwise, arising out of, or in any way relating to the violation of,
noncompliance with or liability under any Environmental Control Statutes
applicable to the operations of the Borrower or any of its Subsidiaries, or the
Borrower's or any of such Subsidiaries' interest in Properties, or any orders,
requirements or demands of Governmental Authorities related thereto, including,
without limitation, attorneys' and consultants' fees, investigation and
laboratory fees, response costs, court costs and litigation expenses, except to
the extent that any of the foregoing arise out of the gross negligence or
willful misconduct of the party seeking indemnification therefor. This indemnity
shall continue in full force and effect regardless of the termination of this
Agreement.
5.9 USE OF PROCEEDS. The Borrower will use the proceeds of the Loans,
and any Letters of Credit issued hereunder, as follows:
(a) to repay all unpaid principal and interest outstanding under the
Existing Agreement, (ii) to fund the Borrower's working capital and capital
expenditures, (iii) to fund general corporate purposes, (iv) to fund Permitted
Repurchases, and (v) to provide additional funds for equipment purchases and
acquisitions; and
(b) any Letters of Credit shall be used for general corporate purposes.
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Notwithstanding anything herein to the contrary, no Loan or Letter of Credit
will be used for the purchasing or carrying of any Margin Stock.
5.10 COMPLIANCE WITH LAWS, ETC. The Borrower shall comply, and shall
cause each of its Subsidiaries to comply, in all material respects with all
applicable Requirements of Law, such compliance to include, without limitation
(i) paying before the same become delinquent all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
upon any of its Properties and (ii) paying all lawful claims which if unpaid
might become a Lien upon any of its Properties; PROVIDED, HOWEVER, that neither
the Borrower nor any of its Subsidiaries shall be required to pay and discharge
or to cause to be paid and discharged any such tax, assessment, charge, levy or
claim so long as (A) the validity or applicability thereof is being contested in
good faith by appropriate proceedings and (B) the Borrower or such Subsidiary
shall, to the extent required by GAAP, have set aside on its books adequate
reserves with respect thereto.
5.11 CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES; PROHIBITIONS ON
CERTAIN AGREEMENTS.
(a) The Borrower will cause each of its Subsidiaries hereafter formed
or acquired to execute and deliver to the Agent promptly upon the formation or
acquisition thereof (i) a Guarantee in form and substance satisfactory to the
Agent, guaranteeing the Obligations, (ii) a Guarantor Security Agreement, in
form and substance satisfactory to the Agent, granting to the Agent, for the
benefit of the Lenders, a security interest in the tangible and intangible
personal property of such Subsidiary, together with appropriate Lien searches
requested by the Agent indicating the Lenders' first priority Lien on such
personal property and (iii) UCC-1 Financing Statements, duly executed by such
Subsidiary, in form and substance satisfactory to the Agent.
(b) The Borrower will not, and will not permit any of its Subsidiaries
to, without the prior written consent of the Majority Lenders, enter into any
indenture, agreement, instrument or other arrangement that, directly or
indirectly, prohibits or restrains, or has the effect of prohibiting or
restraining, or imposes materially adverse conditions upon, the incurrence or
payment of indebtedness, the granting of Liens, the declaration or payment of
dividends, the making of loans, advances or investments or the sale, assignment,
transfer or other disposition of Property, or which imposes any financial
covenants on the Borrower or any of its Subsidiaries.
5.12 YEAR 2000. The Borrower has implemented, and has caused its
Subsidiaries to implement, a plan to address Year 2000 problems that might occur
in the Borrower's or its Subsidiaries' computer hardware, software, operating
systems, telecommunications, building systems and data exchange with their
respective critical vendors and customers. The Borrower has allocated, and has
caused its Subsidiaries to allocate, adequate staff and financial resources, and
the Borrower and its Subsidiaries will be Year 2000 Complaint with all their
respective mission-critical systems by the earlier of such date as the Borrower
and its Subsidiaries have appointed in their Year 2000 remediation plans, or
midnight, Pacific Coast Time, December 31, 1999. "Year 2000 Complaint" means the
state and point in time when the Borrower's and its Subsidiaries' information
processing, financial and business operations, systems and technologies
(collectively, "Technologies") will accurately process date/time data (including
without limitation calculating, comparing and sequencing) from, into and between
the years 1999 and 2000, for their own accounts and when used in combination
with the Technologies of third
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parties. Upon request, the Borrower will provide to the Agent evidence of the
Borrower's and its Subsidiaries' compliance with the terms of this paragraph.
5.13 BORROWING BASE CERTIFICATE. No later than 12:00 Noon (California
time) on the twentieth Business Day of each month, the Borrower shall provide to
the Agent a Borrowing Base Certificate in the form of Exhibit F, dated as of the
first Business Day of such month, certified by the Chief Financial Officer of
the Borrower which shall include a schedule of (i) Accounts Receivable Value,
(ii) Inventory Value, and (iii) Operating Machinery and Equipment Value.
5.14 INTEREST RATE PROTECTION. No later than 60 days following the
Restatement Date, the Borrower shall enter into Interest Rate Protection
Agreements mutually agreeable to the Borrower and the Agent having a term of at
least three years and establishing a fixed or maximum interest rates acceptable
to the Agent for a notional principal amount equal to not less than $15,000,000.
5.15 BORROWING BASE REVIEW AND APPRAISAL. The Agent shall be entitled
to perform, at the Borrower's expense (i) an annual Borrowing Base Review, and
(ii) an annual appraisal of the fixed assets of the Borrower.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that from and after the Restatement Date, so
long as any Commitments remain in effect, any Note remains outstanding and
unpaid or any other amount is owing to any Lender or the Agent hereunder, or any
Letter of Credit remains outstanding:
6.1 FINANCIAL CONDITION COVENANTS. The Borrower shall not violate any
of the following covenants (compliance with which shall be measured for the
Borrower on a consolidated basis):
(a) MAXIMUM FUNDED DEBT TO EBITDA. As of the last day of any fiscal
quarter, commencing with the fiscal quarter ending September 30, 2000, permit
the ratio of Funded Debt to EBITDA, calculated on a cumulative four quarter
rolling basis for such fiscal quarter and the three immediately preceding fiscal
quarters, to exceed 2.50:1; PROVIDED THAT the ratio of Funded Debt to EBITDA
permitted hereunder shall decrease to 2.25:1 and 2.00:1 on December 31, 2001 and
December 31, 2002, respectively.
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(b) FIXED CHARGE RATIO. Permit the Fixed Charge Ratio as of the last
day of any fiscal quarter, calculated on a cumulative four quarter rolling basis
for the present fiscal quarter and the three immediately preceding fiscal
quarters, to be less than the following levels for the periods indicated:
<TABLE>
<CAPTION>
PERIOD RATIO
<S> <C>
Restatement Date to December 30, 2001 1.35:1
December 31, 2001 to December 30, 2002 1.50:1
December 31, 2002 to Loan Commitment Expiration Date 1.80:1
</TABLE>
(c) MINIMUM NET WORTH. Permit Net Worth at any time to be less than the
Net Worth Requirement.
(d) CAPITAL EXPENDITURES. Permit Capital Expenditures to (i) exceed
$12,500,000 during the Borrower's fiscal year 2000, and (ii) exceed $7,000,000
for each fiscal year thereafter.
6.2 LIMITATION ON INDEBTEDNESS. The Borrower shall not create, incur,
assume or suffer to exist any Indebtedness, and shall not permit any of its
Subsidiaries to create, incur, assume or suffer to exist any Indebtedness,
except for:
(a) Indebtedness created hereunder and under the Notes and the other
Loan Documents;
(b) Indebtedness of the Borrower or any of its Subsidiaries outstanding
on the Restatement Date and listed on SCHEDULE 6.2 (and not referred to in any
other clause of this Section 6.2);
(c) Indebtedness (i) evidenced by performance bonds issued in the
ordinary course of business or reimbursement obligations in respect thereof,
(ii) evidenced by a letter of credit facility related to insurance associated
with claims for work-related injuries or (iii) for bank overdrafts incurred in
the ordinary course of business that are promptly repaid, in an aggregate amount
(under clauses (i), (ii) and (iii)) not to exceed $100,000 at any one time
outstanding;
(d) Indebtedness secured by Liens permitted by Section 6.3(g);
(e) Indebtedness incurred in connection with Capitalized Lease
Obligations permitted pursuant to Section 6.3(g);
(f) Indebtedness of Wholly Owned Subsidiaries of the Borrower to the
Borrower or to other Wholly Owned Subsidiaries of the Borrower;
(g) Guarantee Obligations of the Borrower incurred in the ordinary
course of business in respect of obligations of any Subsidiary; and
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(h) other unsecured Indebtedness incurred in the ordinary course of
business in an aggregate amount not to exceed at any time $2,000,000.
6.3 LIMITATION ON LIENS. The Borrower shall not, and shall not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens created hereunder or under any of the other Loan Documents;
(b) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, PROVIDED THAT adequate reserves with respect
thereto are maintained on the books of the Borrower or its Subsidiaries, as the
case may be, in conformity with GAAP;
(c) Liens created by operation of law not securing the payment of
Indebtedness for money borrowed or guaranteed, including carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business which are not overdue for a period of
more than 30 days or which are being contested in good faith by appropriate
proceedings;
(d) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(e) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, would not cause a Material Adverse Effect;
(g) Liens securing Capitalized Lease Obligations and purchase money
security interests on any property or equipment acquired or held by the Borrower
or its Subsidiaries in the ordinary course of business, securing Indebtedness
incurred or assumed for the purpose of financing all or any part of the cost of
acquiring such property or equipment; PROVIDED THAT (i) any such Lien attaches
to such property or equipment concurrently with or within 20 days after the
acquisition thereof, (ii) such Lien attaches solely to the property or equipment
so acquired in such transaction, (iii) the principal amount of the Indebtedness
secured thereby does not exceed 100% of the cost of such property or equipment
including transportation, installation and sales or use taxes; and
(h) Liens existing on the date hereof and referred to in SCHEDULE 6.3
(and not referred to in any other clause of this Section 6.3).
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6.4 LIMITATION ON FUNDAMENTAL CHANGES. The Borrower shall not, and
shall not permit any of its Subsidiaries to, (i) enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or (ii) convey, sell, lease, assign,
transfer or otherwise dispose of all or substantially all of its property,
business or assets, or (iii) acquire any business or Property from, or capital
stock of, or be a party to any acquisition of, any Person EXCEPT THAT, so long
as no Default has occurred and is continuing or would result therefrom:
(a) The Borrower may consummate any Permitted Acquisition;
(b) [RESERVED];
(c) any Subsidiary of the Borrower may be merged or consolidated with
or into: (i) the Borrower, if the Borrower shall be the continuing or surviving
corporation or (ii) any other Subsidiary; PROVIDED THAT if any such transaction
shall be between a Subsidiary and a Wholly Owned Subsidiary, the Wholly Owned
Subsidiary shall be the continuing or surviving corporation; and
(d) any Subsidiary may sell, lease, transfer or otherwise dispose of
any or all of its Property (upon voluntary liquidation or otherwise) to the
Borrower or a Wholly Owned Subsidiary of the Borrower.
6.5 LIMITATION ON SALE OF ASSETS. The Borrower will not, nor will it
permit any of its Subsidiaries to, make any Asset Disposition except Asset
Dispositions of obsolete or worn-out Property, tools or equipment no longer used
or useful in its business so long as the aggregate amount thereof sold in any
single fiscal year by the Borrower and its Subsidiaries shall not have a fair
market value in excess of $250,000; PROVIDED THAT in each case, no Default has
occurred and is continuing or would result from such Asset Disposition.
6.6 LIMITATION ON DIVIDENDS. The Borrower shall not, and shall not
permit any of its Subsidiaries to if a corporation, declare or pay any dividend
(other than dividends payable solely in common stock of the Borrower or its
Subsidiaries) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Borrower or its Subsidiaries or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, or any other distribution
in respect thereof, either directly or indirectly, whether in cash or property
or in obligations of the Borrower or any Subsidiary (such declarations,
payments, setting apart, purchases, redemptions, defeasance, retirements,
acquisitions and distributions being herein called "RESTRICTED PAYMENTS"),
EXCEPT THAT any Subsidiary may make Restricted Payments to the Borrower or to
any other Wholly Owned Subsidiary of the Borrower; PROVIDED THAT in each case no
Default has occurred and is continuing or would result from the making of such
Restricted Payment; and PROVIDED THAT nothing in this Section 6.6 shall prohibit
the Borrower from executing Permitted Repurchases otherwise consistent with this
Agreement.
6.7 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. The Borrower will
not, and will not permit any of its Subsidiaries to, make any advance, loan,
extension of credit or capital
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contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting a business unit of, or make any other
investment in (any of the foregoing, an "INVESTMENT"), any Person, except for:
(a) investments permitted by Section 6.4(a);
(b) investments in marketable securities, liquid investments and other
financial instruments that are acquired for investment purposes and may be
readily sold or otherwise liquidated, that have a value which may be readily
established and which are investment grade;
(c) investments outstanding on the date hereof and identified in
SCHEDULE 6.7;
(d) operating deposit accounts with banks;
(e) investments by the Borrower and its Subsidiaries in the Borrower
and its Subsidiaries;
(f) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business;
(g) extensions of credit to employees evidenced by promissory notes in
an aggregate amount not to exceed $1,000,000; and
(h) Permitted Acquisitions.
6.8 TRANSACTIONS WITH AFFILIATES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of property, employee
compensation arrangements, or the rendering of any service, with any Affiliate
or any Subsidiary not a Wholly Owned Subsidiary UNLESS such transaction is in
the ordinary course of the Borrower's or such Subsidiary's business and is upon
terms no less favorable to the Borrower or such Subsidiary, as the case may be,
than it would obtain in a comparable arm's length transaction with a Person not
an Affiliate; PROVIDED THAT, if any such transaction has a value in excess of
$1,000,000 the Majority Lenders shall have consented thereto.
6.9 FISCAL YEAR. Borrower shall not permit its fiscal year or the
fiscal year of any of its Subsidiaries to end on a day other than December 31.
6.10 SALE-LEASEBACK TRANSACTIONS. The Borrower shall not, and shall not
permit any of its Subsidiaries to, sell, assign or otherwise transfer any of its
Properties, rights or assets (whether now owned or hereafter acquired) to any
Person and thereafter directly or indirectly lease back the same or similar
property.
6.11 LINES OF BUSINESS. The Borrower will not, nor will it permit any
of its Subsidiaries to, engage to any substantial extent in any line or lines of
business activity other than the business of video duplication, post-production,
audio sweetening, the distribution of national television spot advertising,
trailers and electronic press kits for the motion picture and
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television industries, and the ownership and rental of limited amounts of niche
programming and media buying.
6.12 STOCK REPURCHASES. The Borrower shall not use any amounts drawn
down under this Agreement for the purpose of repurchasing shares of its capital
stock at any time during which the Borrower is not Solvent, and shall otherwise
ensure that all such repurchases are conducted in compliance with all applicable
law, including without limitation the provisions of Section 500 et seq. of the
California Corporations Code.
6.13 CERTAIN ACCOUNTING CHANGES. The Borrower shall not change any
accounting methodology or policy respecting to the calculation of the value of
its Operating Machinery and Equipment without the prior consent of the Majority
Lenders.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall default in the payment when due (whether at
stated maturity or upon mandatory or optional prepayment) of any principal of or
interest on any Loan, any fee or any other amount payable by it hereunder or
under any other Loan Document; or
(b) Any representation or warranty made or deemed made by any Obligor
herein or in any other Loan Document or which is contained in any certificate,
document or financial or other statement furnished at any time under or in
connection with this Agreement or any other Loan Document shall prove to have
been incorrect in any material respect when made or deemed made; or
(c) The Borrower shall default in the observance or performance of any
agreement contained in Section 4.3(a), 4.3(b), 5.4(ii), 5.9, 5.11 or 5.13 or any
provision of Section 6; or
(d) Any Obligor shall default in the observance or performance of any
other agreement or obligation contained in this Agreement or the other Loan
Documents (other than as provided in paragraphs (a) through (c) of this
Section), and such default shall continue unremedied for a period of 30 days
after notice thereof from the Agent to the Borrower; or
(e) Any Guarantee shall cease, for any reason, to be in full force and
effect; or
(f) The Borrower or any other Obligor shall default in the payment when
due of principal of or interest on any Indebtedness (other than the Notes)
issued under the same indenture or other agreement, if the original principal
amount of Indebtedness covered by such indenture or agreement is $100,000 or
more; or any event specified in any note, agreement, indenture or other document
evidencing or relating to any such Indebtedness shall occur if the effect of
such event is to cause, or (with the giving of any notice or the lapse of time
or both) to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, such Indebtedness to become
due, or to be prepaid in full (whether by redemption, purchase, offer to
purchase or otherwise), prior to its stated maturity; or
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(g) (i) The Borrower or any other Obligor shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Borrower or any
other Obligor shall make a general assignment for the benefit of its creditors;
or (ii) there shall be commenced against the Borrower or any other Obligor any
case, proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged, unstayed or unbonded
for a period of 60 days; or (iii) there shall be commenced against the Borrower
or any other Obligor any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Borrower or
any other Obligor shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) the Borrower or any other Obligor shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due or there shall be a general assignment for
the benefit of creditors; or
(h) (i) The Borrower or any Commonly Controlled Entity shall
engage in any non-exempt "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not waived,
shall exist with respect to any Plan, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee would reasonably be expected to result in the termination of such Plan
for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate
for purposes of Title IV of ERISA (other than a standard termination) or (v) the
Borrower or any Commonly Controlled Entity would reasonably be expected to incur
any liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan; and in each case regarding clauses (i)
through (v) above, such event or condition, together with all other such events
or conditions, if any, would reasonably be expected to result in a Material
Adverse Effect; or
(i) One or more judgments or decrees shall be entered against the
Borrower or any Subsidiary involving in the aggregate a liability (not paid or
fully covered by insurance where the insurer has admitted liability in respect
of such judgment) of $500,000 or more, or involving in the aggregate a liability
(regardless of insurance coverage) of $1,000,000 or more, and all such judgments
or decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 30 days from the entry thereof or in any event five days before
the date of any sale pursuant to such judgment or decree; or
(j) The Liens created by the Collateral Documents and/or the Guarantor
Collateral Documents shall at any time not constitute valid and perfected Liens
on the collateral intended to
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be covered thereby in favor of the Agent, free and clear of all other Liens
(other than Liens permitted under Section 6.3), or, except for expiration in
accordance with its terms, any of the Collateral Documents and/or the Guarantor
Collateral Documents shall for whatever reason be terminated or cease to be in
full force and effect, or the enforceability thereof shall be contested by any
Obligor; or
(k) (i) R. Luke Stefanko, or another officer of the Borrower
as of the Restatement Date, shall cease to be the Chief Executive Officer of the
Borrower, (ii) R. Luke Stefanko shall cease to beneficially own Capital Stock
representing at least 20% of the votes that may be cast in an election of
directors of the Borrower, or (iii) individuals who constituted the Borrower's
Board of Directors as of the Restatement Date shall cease for any reason to
constitute a majority of the directors then in office;
then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (g) above, automatically the Commitments to the Borrower and the
commitment to issue Letters of Credit shall immediately terminate and the Loans
made to the Borrower hereunder (with accrued interest thereon) and all other
Obligations shall immediately become due and payable, and (B) if such event is
any other Event of Default, with the consent of the Majority Lenders, the Agent
may, or upon the request of the Majority Lenders, the Agent shall, take any or
all of the following actions: (i) by notice to the Borrower declare the
Commitments to the Borrower and the commitment to issue Letters of Credit to be
terminated forthwith, whereupon such Commitments and the commitment to issue
Letters of Credit shall immediately terminate; and (ii) by notice of default to
the Borrower, declare the Loans (with accrued interest thereon) and all other
Obligations under this Agreement and the Notes to be due and payable forthwith,
whereupon (x) the same shall immediately become due and payable and (y) to the
extent any Letters of Credit are then outstanding, the Borrower shall make a
Cash Collateral Deposit in an amount equal to the aggregate Letter of Credit
Amount. In all cases, with the consent of the Majority Lenders, the Agent may
enforce any or all of the Liens and security interests and other rights and
remedies created pursuant to any Loan Document or available at law or in equity.
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by the Borrower.
SECTION 8. THE AGENT
8.1 APPOINTMENT. Each Lender hereby irrevocably designates and appoints
Union Bank of California, N.A., as Agent for such Lender under this Agreement
and the other Loan Documents, and each such Lender irrevocably authorizes Union
Bank of California, N.A., as the Agent for such Lender, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Agent by the terms of this Agreement and the other Loan Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Agent shall have no duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent.
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8.2 DELEGATION OF DUTIES. The Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
8.3 EXCULPATORY PROVISIONS. Neither the Agent, nor any of the Agent's
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower, any Subsidiary
or any other Obligor or any officer thereof contained in this Agreement or any
other Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the Notes or any other Loan Document or for any failure of the Borrower, any
Subsidiary or any other Obligor to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower, any
Subsidiary or any other Obligor.
8.4 RELIANCE BY THE AGENT. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), the Accountants and independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Agent. The Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan Document unless it
shall first receive such advice or concurrence of the Majority Lenders or all
Lenders, as it deems appropriate, or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense (except
those incurred solely as a result of the Agent's gross negligence or willful
misconduct) which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the Notes and the other
Loan Documents in accordance with a request of the Majority Lenders or all
Lenders, as may be required, and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Lenders and all future
holders of the Notes.
8.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default hereunder unless the Agent has
received notice from a Lender or the Borrower referring to this Agreement,
describing such Default and stating that such notice is a "notice of default".
In the event that the Agent receives such a notice, the Agent shall give
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notice thereof to the Lenders. The Agent shall take such action with respect to
such Default as shall be reasonably directed by the Majority Lenders or all
Lenders as appropriate; PROVIDED THAT unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default as
it shall deem advisable in the best interests of the Lenders or as the Agent
shall believe necessary to protect the Lenders' interests in the Collateral or
the Guarantor Collateral.
8.6 NON-RELIANCE ON THE AGENT AND OTHER LENDERS. Each Lender expressly
acknowledges that neither the Agent, nor any of the Agent's officers, directors,
partners, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including any review of the affairs of the Borrower, any Subsidiary or
any other Obligor, shall be deemed to constitute any representation or warranty
by the Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower, any
Subsidiary and the other Obligors and made its own decision to make its Loans,
and participate in Letters of Credit, hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower, its
Subsidiaries and the other Obligors. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall have no duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower, any Subsidiary or any other Obligor which may come into the
possession of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
8.7 INDEMNIFICATION. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower, its Subsidiaries
or the other Obligors and without limiting the obligation of such Persons to do
so), ratably according to the respective amounts of their Commitments, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs (including, without limitation, the allocated
cost of internal counsel), expenses or disbursements of any kind whatsoever
which may at any time (including, without limitation, at any time following the
payment of the Notes) be imposed on, incurred by or asserted against the Agent,
in its capacity as Agent, but not as a Lender hereunder, in any way relating to
or arising out of this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; PROVIDED THAT no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent they arise from the gross negligence or willful misconduct of the
party to be indemnified. The agreements in this Section shall survive the
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payment of the Notes and all other amounts payable hereunder and the expiration
of the Letters of Credit.
8.8 THE AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower, any Subsidiary and the other Obligors as though the
Agent were not the Agent hereunder and under the other Loan Documents. The Loans
made or renewed and the Letters of Credit issued or participated in by the
Agent, and any Note issued to the Agent shall have the same rights and powers
under this Agreement and the other Loan Documents as any Lender and the Agent
may exercise the same as though it were not the Agent, and the terms "Lender"
and "Lenders" shall include the Agent in its individual capacity.
8.9 SUCCESSOR AGENT. The Agent may resign as Agent upon 30 days' notice
to the Lenders. If the Agent shall resign as Agent under this Agreement and the
other Loan Documents, then the Majority Lenders shall appoint from among the
Lenders a successor agent for the Lenders, which successor agent (so long as no
Default has occurred and is continuing) shall be approved by the Borrower (which
consent shall not be unreasonably withheld), whereupon such successor agent
shall succeed to the rights, powers and duties of the Agent and the term "Agent"
shall mean such successor agent, effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any holders of the Notes. After any retiring
Agent's resignation as Agent, the provisions of this Section shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents. Further, if the Agent no
longer has any Loans, Letter of Credit participations or Commitments hereunder,
the Agent shall immediately resign and shall be replaced, and have the benefits,
as set forth in this Section 8.9. In addition, after the replacement of an Agent
hereunder, the retiring Agent shall remain a party hereto and shall continue to
have all the rights and obligations of an Agent under this Agreement with
respect to Letters of Credit issued by it prior to such replacement, but shall
not be required to issue additional Letters of Credit.
8.10 COLLATERAL DOCUMENTS. Anything contained in any of the Loan
Documents to the contrary notwithstanding, the Borrower, the Agent and each
Lender hereby agree that (a) no Lender shall have any right individually to
realize upon any of the Collateral or Guarantor Collateral under any Loan
Document or to enforce any Guarantee, it being understood and agreed that all
powers, rights and remedies under the Collateral Documents and Guarantor
Collateral Documents and the Guarantees may be exercised solely by the Agent for
the benefit of the Lenders in accordance with the terms thereof, and (b) in the
event of a foreclosure by the Agent on any of the Collateral or Guarantor
Collateral pursuant to a public or private sale, the Agent or any Lender may be
the purchaser of any or all of such Collateral or Guarantor Collateral at any
such sale and the Agent, as agent for and representative of the Lenders (but not
any Lender or Lenders in its or their respective individual capacities unless
the Majority Lenders shall otherwise agree in writing) shall be entitled, for
the purpose of bidding and making settlement or payment of the purchase price
for all or any portion of the Collateral or Guarantor Collateral sold at any
such public sale, to use and apply any of the Obligations as a credit on account
of the purchase price for any such collateral payable by the Agent at such sale.
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SECTION 9. MISCELLANEOUS
9.1 AMENDMENTS AND WAIVERS. Except as otherwise expressly provided in
this Agreement, any provision of the Loan Documents may be modified or
supplemented only by an instrument in writing signed by the Borrower, the Agent
and the Majority Lenders, or by the Borrower and the Agent acting with the
consent of the Majority Lenders, and any provision of any Loan Document may be
waived by the Majority Lenders or by the Agent acting with the consent of the
Majority Lenders; PROVIDED, HOWEVER, that no such waiver and no such amendment,
supplement or modification shall (i) (a) reduce the amount or extend the
maturity of any Note or any installment due thereon, or reduce the rate or
extend the time of payment of interest thereon, or reduce the amount or extend
the time of payment of any fee, indemnity or reimbursement payable to any Lender
hereunder, or change the amount of any Lender's Commitment, or amend, modify or
waive any provision of Section 2.4, without the written consent of the Lender
affected thereby; or (b) amend, modify or waive any provision of this Section
9.1 or reduce the percentage specified in or otherwise modify the definition of
Majority Lenders, or consent to the assignment or transfer by any Obligor of any
of its rights and obligations under this Agreement and the other Loan Documents
(except as permitted under Section 6.4); or (c) release any Obligor from any
liability under its respective Loan Documents; or (d) release any material
portion of the Collateral or any material portion of the Guarantor Collateral,
except for any Asset Disposition or release of Lien permitted by this Agreement
or any other Loan Document; or (e) amend, modify or waive, directly or
indirectly, any of the provisions of Section 2.1(f) or 2.11; or (f) amend,
modify or waive any provision of this Agreement requiring the consent or
approval of all Lenders; or (g) increase the Aggregate Commitment, in each case
set forth in clauses (i)(b) through (i)(g) above without the written consent of
all the Lenders; or (ii) amend, modify or waive any provision of Section 4.2
with respect to the making of a Revolving Loan without the written consent of
the Majority Lenders; or (iii) amend, modify or waive any provision of Section 8
without the written consent of the Agent, or any provision affecting the rights
and duties of the Agent as the issuer of Letters of Credit without the consent
of the then Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the other Obligors, the Lenders, the Agent and all future
holders of the Notes. In the case of any waiver, the Borrower, the other
Obligors, the Lenders, and the Agent shall be restored to their former position
and rights hereunder and under the outstanding Notes and any other Loan
Documents, and any Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default,
or impair any right consequent thereon.
9.2 NOTICES. All notices, requests and demands or other communications
to or upon the respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered by hand, or 3 days
after being deposited in the United States mail, certified and postage prepaid
and return receipt requested, or, in the case of telecopy notice, when received,
in each case addressed as follows in the case of the Borrower and the Agent, and
as set forth on the signature pages hereto, or in the Assignment and Acceptance
pursuant to which a Person becomes a party hereto, in the case of the Lenders,
or to such other address as may be hereafter notified by the respective parties
hereto and any future holders of the Notes:
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<PAGE>
<TABLE>
<S> <C>
The Borrower: VDI Multimedia
7083 Hollywood Boulevard
Hollywood, California 90028
Attention: Clarke Brewer
Telecopy: (323) 957-2297
The Agent: Union Bank of California, N.A
445 South Figueroa Street, 10 Floor
Los Angeles, California 90071-1100
Attention: Gina West
Telecopy: (213) 236-7635
</TABLE>
PROVIDED THAT any notice, request or demand to or upon the Agent or the Lenders
pursuant to Section 2.1, 2.3, 2.4 or 2.6 shall not be effective until received.
9.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Agent or any Lender, any right, remedy, power
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Notes.
9.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay or
reimburse the Agent for all its reasonable costs and out-of-pocket expenses
(including travel and other expenses incurred by it or its agents in connection
with performing due diligence with regard hereto) incurred in connection with
the development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, syndication efforts (whether completed before or after the
Restatement Date) in connection with this Agreement and the reasonable fees and
disbursements of counsel to the Agent, (b) after the occurrence and during the
continuance of a Default, to pay or reimburse the Agent and each Lender for all
its reasonable costs and out-of-pocket expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the Notes, the
other Loan Documents and any such other documents or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or of any insolvency or bankruptcy
proceeding, including, without limitation, reasonable legal fees and
disbursements of counsel to the Agent and each Lender (including the allocated
costs of internal counsel to the Agent and the Lenders which costs are not in
duplication of any costs of outside counsel to the Agent and each Lender), (c)
to pay, and indemnify and hold harmless each Lender and the Agent from any and
all recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp,
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<PAGE>
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the Notes, the other Loan Documents and any such other documents
and (d) to pay, and indemnify and hold harmless each Lender and the Agent and
the officers, partners, directors, employees, agents and affiliates of the Agent
or any Lender (collectively "INDEMNITEES") from and against, any and all
Indemnified Liabilities, PROVIDED THAT the Borrower shall have no obligation
hereunder to the Agent or any Lender with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of the Agent or any
Lender. As used herein, "Indemnified Liabilities" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including environmental
claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or abate any activities relating to
Hazardous Materials), expenses and disbursements of any kind or nature
whatsoever (including the reasonable fees and disbursements of counsel for
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, whether or not any such
Indemnitee shall be designated as a party or a potential party thereto, and any
fees or expenses incurred by Indemnitees in enforcing this indemnity), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations (including securities and
commercial laws, statutes, rules or regulations and environmental laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner relating
to or arising out of this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including Lenders' agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof or
the issuance of Letters of Credit hereunder or the use or intended use of any
thereof, or any enforcement of any of the Loan Documents (including any sale of,
collection from, or other realization upon any of the Collateral or the
Guarantor Collateral or the enforcement of the Guarantees)). (To the extent that
the undertakings to defend, indemnify, pay and hold harmless set forth in this
Section 9.5 may be unenforceable in whole or in part because they are violative
of any law or public policy, the Borrower shall contribute the maximum portion
that it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of
them.) The agreements in this Section shall survive repayment of the Notes and
all other amounts payable hereunder.
9.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING LENDERS.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Agent, all future holders of the Notes and their
respective successors and assigns, except that the Borrower may not assign,
transfer or delegate any of its rights or obligations under this Agreement
without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking or
finance business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("PARTICIPANTS") participating interests in any
Loan owing to such Lender, any Letter of Credit participated in by such Lender,
any Note held by such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents;
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<PAGE>
PROVIDED THAT the holder of any such participation, other than an Affiliate of
such Lender, shall not be entitled to require such Lender to take or omit to
take any action hereunder except action directly affecting the extension of the
maturity of any portion of the principal amount of a Loan or Commitment, the
expiration of a Letter of Credit or any portion of interest or fees related
thereto allocated to such participation or a reduction of the principal amount
or principal payment amount of or the rate of interest payable on the Loans or
any fees related thereto or reduction of the amount to be reimbursed under any
Letter of Credit, or a release of any Obligor or any substantial portion of the
Collateral or the Guarantor Collateral or any increase in participation amounts.
In the event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Note and the participant in any such Letter of Credit for all purposes
under this Agreement and the other Loan Documents, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and the other
Loan Documents. The Borrower agrees that if amounts outstanding under this
Agreement and the Notes are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and any Note to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under this Agreement or any Note, PROVIDED THAT such
Participant shall only be entitled to such right of setoff if it shall have
agreed in the agreement pursuant to which it shall have acquired its
participating interest to share with the Lenders the proceeds thereof as
provided in Section 9.7. The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 2.13, 2.14 and 2.15 with respect to its
participation in the Commitments and the Loans and the Letters of Credit
outstanding from time to time; PROVIDED THAT no Participant shall be entitled to
receive any greater amount pursuant to such Sections than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to any of its
Affiliates or to any Lender, any Affiliate thereof or to one or more additional
lenders or financial institutions, which additional lenders shall be subject to
the consent of the Borrower, such consent not to be unreasonably withheld and
not to be required if a Default has occurred and is continuing, and the Agent
("PURCHASING LENDERS") all or any part of its rights and obligations under this
Agreement, the Notes and the other Loan Documents pursuant to an Assignment and
Acceptance executed by such Purchasing Lender and such transferor Lender and
delivered to the Agent for its acceptance and recording in the Register (as
defined in (d) below), PROVIDED THAT (i) any such sale must result in the
Purchasing Lender having at least $5,000,000 in aggregate amount of obligations
under this Agreement, the Notes and the other Loan Documents and (ii) each such
assignment by a Lender of its Revolving Loans, Note, Revolving Commitment or its
participation in Letters of Credit shall be in such manner so that the same
portion of its Revolving Loans, Note, Revolving Commitment and its participation
in Letters of Credit is assigned to the respective assignee. Upon such
execution, delivery, acceptance and recording, from and after the transfer
effective date determined pursuant to such Assignment and Acceptance, (x) the
Purchasing Lender thereunder shall be a party hereto and, to the extent provided
in such Assignment and
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<PAGE>
Acceptance, have the rights and obligations of a Lender hereunder with a
Commitment as set forth therein, and (y) the transferor Lender thereunder shall,
to the extent of such assigned portion and as provided in such Assignment and
Acceptance, be released from its obligations under this Agreement and the other
Loan Documents (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of a transferor Lender's rights and obligations under this
Agreement, such transferor Lender shall cease to be a party hereto). Such
Assignment and Acceptance shall be deemed to amend this Agreement to the extent,
and only to the extent, necessary to reflect the addition of such Purchasing
Lender and the resulting adjustment of Commitment Percentages arising from the
purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement, the Notes and the
other Loan Documents. On or prior to the transfer effective date determined
pursuant to such Assignment and Acceptance, the Borrower, at its own expense,
shall execute and deliver to the Agent in exchange for the surrendered Note or
Notes a new Note or Notes to the order of such Purchasing Lender in an amount
equal to the Commitments assumed by it pursuant to such Assignment and
Acceptance, and if the transferor Lender has retained a Commitment hereunder,
new Notes to the order of the transferor Lender in an amount equal to the
Commitments retained by it hereunder. Such new Notes shall be dated the
Restatement Date and shall otherwise be in the form of the Notes replaced
thereby. The Notes surrendered by the transferor Lender shall be returned by the
Agent to the Borrower marked "canceled."
(d) The Agent shall maintain at its address referred to in Section 9.2
a copy of each Assignment and Acceptance delivered to it and a register (the
"REGISTER") for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amount of the Loans owing to, and, if
applicable, the Letters of Credit participated in by, each Lender from time to
time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as the owner of the Loans and the
participant in the Letters of Credit, if applicable, recorded therein for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed in
accordance with the terms hereof, together with payment to the Agent by the
Purchasing Lender of a registration and processing fee of $2,500, the Agent
shall (i) promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto record the information contained
therein in the Register.
(f) The Borrower authorizes each Lender to disclose to any Participant
or Purchasing Lender (each, a "TRANSFEREE") and any prospective Transferee any
and all financial information in such Lender's possession concerning the
Borrower, its Subsidiaries, and their Affiliates which has been delivered to
such Lender by or on behalf of the Borrower pursuant to this Agreement or any
other Loan Document or which has been delivered to such Lender by or on behalf
of the Borrower in connection with such Lender's credit evaluation of the
Borrower, its Subsidiaries, and their Affiliates prior to becoming a party to
this Agreement.
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<PAGE>
(g) Nothing herein shall prohibit any Lender from pledging or assigning
any of its rights under its Notes, or, if applicable, its participation in any
Letter of Credit, to any Federal Reserve Bank in accordance with applicable law.
9.7 ADJUSTMENTS; SET-OFF.
(a) If any Lender (a "BENEFITTED LENDER") shall at any time receive any
payment of all or part of its Loans, its participations in Letters of Credit, or
interest thereon, or fees, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 7(g), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans, its participations in Letters of Credit,
or interest thereon, or fees, such Benefitted Lender shall purchase for cash
from the other Lenders such portion of each such other Lender's Loans,
participations in Letters of Credit, or fees, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders;
PROVIDED, HOWEVER, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Loan or its participations in Letters
of Credit may exercise all rights of payment (including, without limitation,
rights of set-off) with respect to such portion as fully as if such Lender were
the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, with the prior consent of the Majority Lenders, each Lender shall have the
right, exercisable upon the occurrence and during the continuance of an Event of
Default and acceleration of the Obligations pursuant to Section 7, without prior
notice to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, to set-off and appropriate and apply
against any such Obligations any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims in any currency, in each case whether direct or indirect,
absolute or contingent, matured or unmatured, at any time held or owing by such
Lender or any branch or agency thereof or bank controlling such Lender to or for
the credit or the account of the Borrower. Each Lender agrees promptly to notify
the Borrower after any such set-off and application made by such Lender,
PROVIDED THAT the failure to give such notice shall not affect the validity of
such set-off and application.
9.8 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery by telecopier of an executed counterpart of a signature
page to this Agreement shall be effective as delivery of an originally executed
counterpart of this Agreement.
9.9 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any
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<PAGE>
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9.10 INTEGRATION. This Agreement represents the entire agreement of the
Borrower, the Agent and the Lenders with respect to the subject matter hereof,
and there are no promises, undertakings, representations or warranties by the
Agent or any Lender relative to the subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
9.12 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that: (a) it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the Notes and the other Loan Documents; (b) neither the Agent nor
any Lender has any fiduciary relationship to the Borrower solely by virtue of
any of the Loan Documents, and the relationship pursuant to the Loan Documents
between the Agent and the Lenders, on one hand, and the Borrower on the other
hand, is solely that of creditor and debtor; and (c) no joint venture exists
among the Lenders or among the Borrower, on one hand and the Lenders, on the
other hand.
9.13 HEADINGS. Section headings herein are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
9.14 COPIES OF CERTIFICATES, ETC. Whenever the Borrower is required to
deliver notices, certificates, opinions, statements or other information
hereunder to the Agent for delivery to any Lender, it shall do so in such number
of copies as the Agent shall reasonably specify.
9.15 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.
(a) The Borrower acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Borrower or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Lender, or by one or more Subsidiaries or
affiliates of such Lender and the Borrower hereby authorizes each Lender to
share any information delivered to such Lender by the Borrower and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such Subsidiary or affiliate,
it being understood that any such Subsidiary or affiliate receiving such
information shall be bound by the provisions of clause (b) below as if it were a
Lender hereunder. Such authorization shall survive the repayment of the Loans,
the expiration of the Letters of Credit and the termination of the Commitments.
(b) Each Lender and the Agent agrees (on behalf of itself and each of
its affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with their customary
procedures for handling confidential information of the same nature and in
accordance with safe and sound banking practices, any non-public information
supplied to it by the Borrower pursuant to this Agreement that is identified by
the Borrower as being confidential at the time the same is delivered to the
Lenders
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or the Agent, PROVIDED THAT nothing herein shall limit the disclosure of any
such information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) to counsel for any of the Lenders or the Agent, (iii) to
bank examiners or other regulatory authorities, auditors or accountants, (iv) to
the Agent or any other Lender, (v) in connection with any litigation to which
any one or more of the Lenders or the Agent is a party, (vi) to a subsidiary or
affiliate of such Lender as provided in clause (a) above or (vii) to any
assignee or participant (or prospective assignee or participant), and PROVIDED
FURTHER that in no event shall any Lender or the Agent be obligated or required
to return any materials furnished by the Borrower.
9.16 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER
DOCUMENT EXECUTED IN CONNECTION HEREWITH AND FOR ANY COUNTERCLAIM THEREIN.
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9.17 EFFECT OF AMENDMENT AND RESTATEMENT. This Agreement is intended to
completely amend, restate and replace the Existing Agreement, without novation.
The Borrower hereby acknowledges, certifies and agrees that if, pursuant to the
Existing Agreement the Lender party thereto has made advances on a revolving
basis to the Borrower that are outstanding as of the date as of this Agreement,
or the Agent has issued letters of credit that are outstanding as of the date of
this Agreement, the Borrower's respective obligations to repay those advances to
the Lender and to reimburse the Agent in respect of drawings under such letters
of credit are not subject to any defense, counterclaim, set-off, right of
recoupment, abatement or other claim or determination.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
BORROWER
VDI MULTIMEDIA
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
AGENT
UNION BANK OF CALIFORNIA, N.A.,
as Agent
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
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LENDERS
UNION BANK OF CALIFORNIA, N.A.,
as a Lender
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
ADDRESS FOR NOTICES
Commercial Portfolio Administration
445 South Figueroa Street, 10th Floor
Los Angeles, California 90071-1100
Attention: Gina West
Telephone: (213) 236-6530
Facsimile: (213) 236-7635
APPROVED LENDING OFFICES
Applicable Lending Office for Base Rate Loans:
445 South Figueroa Street
Los Angeles, California 90071-1100
Applicable Lending Office for LIBOR Loans:
445 South Figueroa Street
Los Angeles, California 90071-1100
Applicable Lending Office for Participations in
Letters of Credit:
445 South Figueroa Street
Los Angeles, California 90071-1100
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SANWA BANK CALIFORNIA,
as a Lender
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
ADDRESS FOR NOTICES
15165 Ventura Boulevard, Suite 445
Sherman Oaks, CA 91403
Attention: Kent Mustari
Telephone: (818) 905-0935
Facsimile: (818) 905-1002
APPROVED LENDING OFFICES
Applicable Lending Office for Base Rate Loans:
15165 Ventura Boulevard, Suite 445
Sherman Oaks, CA 91403
Applicable Lending Office for LIBOR Loans:
15165 Ventura Boulevard, Suite 445
Sherman Oaks, CA 91403
Applicable Lending Office for Participations in
Letters of Credit:
15165 Ventura Boulevard, Suite 445
Sherman Oaks, CA 91403
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U.S. BANK NATIONAL ASSOCIATION,
as a Lender
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
ADDRESS FOR NOTICES
2450 Colorado Avenue
Suite 4000 West
Santa Monica, CA 90404-3515
Attention: Todd Faulstich
Telephone: (310) 315-3348
Facsimile: (310) 315-4278
APPROVED LENDING OFFICES
Applicable Lending Office for Base Rate Loans:
2450 Colorado Avenue
Suite 4000 West
Santa Monica, CA 90404-3515
Applicable Lending Office for LIBOR Loans:
2450 Colorado Avenue
Suite 4000 West
Santa Monica, CA 90404-3515
Applicable Lending Office for Participations in
Letters of Credit:
2450 Colorado Avenue
Suite 4000 West
Santa Monica, CA 90404-3515
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SCHEDULE 2.1
COMMITMENTS
<TABLE>
<CAPTION>
REVOLVING LOAN
LENDER COMMITMENT
------ ----------
<S> <C>
Union Bank of California, N.A. $25,000,000
Sanwa Bank California $10,000,000
U.S. Bank National Association $10,000,000
------------------------------------- -------------------------------------
Total $45,000,000
</TABLE>
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SCHEDULE 2.8
APPLICABLE MARGIN
<TABLE>
<CAPTION>
Funded Debt/EBITDA Applicable LIBOR Margin Applicable Base Rate Margin
<S> <C> <C>
greater than or 2.50% 0.75%
equal to $2.00
greater than or 2.25% 0.50%
equal to $1.50 but
less than 2.00
less than 1.50 2.00% 0.25%
</TABLE>
71
